Stein v. hhgregg Inc.

Gregg has a compensation policy whereby its retail and sales employees, who are paid solely on the basis of commission, are advanced a “draw” to meet the minimum-wage requirements whenever their commissions fall below minimum wage. The amount of the draw is then deducted from future earnings in weeks when the employees’ commissions exceed the minimum-wage requirements. Plaintiffs, on behalf of themselves and other former and current Gregg employees, brought suit claiming violations of the Fair Labor Standards Act (FLSA) and state law. The district court found that defendants’ compensation policy was legal and dismissed all of plaintiffs’ federal claims. The Sixth Circuit reversed. The district court incorrectly applied the retail or service establishment exemption, which relieves employers from only their overtime obligations, 29 U.S.C. 207(i). Department of Labor regulations state that when an employee earns less in commissions than he was advanced through a draw, “a deduction of the excess amount from commission earnings for a subsequent period, if otherwise lawful, may or may not be customary under the employment arrangement,” 29 C.F.R. 779.416. Plaintiffs alleged sufficient facts to indicate that Gregg violated the FLSA by policies and practices that encouraged employees to work “off the clock” without compensation View "Stein v. hhgregg Inc." on Justia Law