“OT, Commissions & Hourly Rates:
Making Cents of Route Driver Pay”
Presented by Heather A. Bailey, Esq.
SmithAmundsen LLC
November 13, 2013
10:30am – Noon
NAMA Coffee, Tea & Water Show 2013
Gaylord Opryland Convention Center, Tennessee Ballroom B
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By the hour?
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With overtime pay?
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Commissions only?
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Salary only?
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Fluctuating Workweek
method?
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Trucks 10,001+
GVWR; and affecting
interstate commerce:
◦ Many of your vending
items are shipped
from out of state
vendors or
distributors and do
not “come to rest” in
warehouse; or
◦ Routes cross state
lines
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S.D. of FLA case –
NAMA member
fought route driver
on MCE & won!
M.D. of TN case –
NAMA amicus brief in
support of industry
on MCE
Countless DOL audit
& employee demand
letter fights
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Alaska
California
Colorado*
DC*
Hawaii*
Kansas*
Maine
New Hampshire
New Jersey
New Mexico*
New York
Washington
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You do NOT need to
pay your route
drivers overtime
You may pay them a
weekly salary for all
hours worked
◦ Be careful of deducting
time from salary!!
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You may pay them
based upon a
commission only
You can still choose
to pay OT
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Agree to pay $X per
hour (at least
minimum wage)
Depending on state,
pay time and a ½ for
those hours worked
over 40 in a week or
8 in a day
CANNOT combine
weeks to determine
or average out
Note: some states
require double time
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Agree to pay driver
based upon % of
commissions
Take commissions
for the week, ÷ by
hours worked to
get hourly rate
Take ½ that rate x
overtime hours
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For example, a non-exempt
driver earned $1,000 in
weekly commissions and
worked a total of 48 hours in
the week. The employee’s
hourly rate for that week is
$20.83 (1,000 divided by
48). Thus, the operator
needs to compensate this
employee an additional
$83.32 for his overtime
hours ($20.83 divided by 2 =
$10.415 (the half rate)
multiplied by 8 overtime
hours).
Collect Sales Monthly?
 One way to compute the driver’s
overtime rate would be to take
the monthly commissions of
$2,000 and multiply that by 12
months in the year ($24,000)
and then divide that by 52 weeks
in the year to give you the
employee’s weekly commissions
of $461.54. Thus, if the
employee worked 48 hours in
one of the weeks that month, his
overtime would be calculated as
follows: $461.54 divided by 48
hours = $9.62 for a regular rate.
Thus, the employee’s additional
overtime compensation would be
$4.81 multiplied by the 8
overtime hours (the hourly rate
$9.62 divided by 2 to get the
half time rate = $4.81).
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Alternative to paying
time and a ½ OT
Only HALF TIME is
paid for OT
Much like paying
salary but with OT
Must give notice and
best to have
employee agree in
writing
How do we get away
with this?
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Agree to pay $X per
week guaranteed
Each week take
salary ÷ the
number of hours
worked to get
hourly rate
Take ½ the hourly
rate x overtime
hours
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If a driver makes a fixed salary of $500 per week
and worked 45 hours one week, you divide $500
by 45 hours, which equals $11.11 per hour: the
employee’s rate for that week for straight-time.
You then divide $11.11 by 2 in order to calculate
the half-time for the 5 hours of overtime worked,
which equals $5.56. Thus, you would owe the
employee an additional $5.56 per hour for the 5
hours of worked overtime because he was
already compensated straight-time for those
hours with the fixed salary.
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You can pay drivers with a combination of
pay
◦ Salary or hourly plus commission
◦ Commission plus non-discretionary bonuses
◦ Safety awards or like perks
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Any pay that driver is entitled to receive for
his work gets included in these “weekly
compensation” for hourly rate determination
formulas
◦ Not included: gifts, discretionary/holiday bonuses,
and premium payments added to hourly wages
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Individual Wage
Complaint for wages
DOL Audit
Individual Lawsuit for
wages
All can turn into Class
Actions for all drivers
Potential damages:
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Back pay
Interest
Penalties
Attorney Fees & Costs
Criminal consequences
Headaches & morale
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Determine whether MCE applies or not
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If not, determine which method you want to
pay your route drivers OT
◦ If so, determine salary and pay salary each pay period
(few exceptions)
◦ Know when you can and cannot deduct for driver not
working a full workweek
◦ No matter which method, ensure OT is calculated on a
weekly workweek basis and ALL applicable comp is
included when determining hourly rate
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Always ensure driver is paid minimum wage
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When in doubt, contact L&E counsel
◦ Check payroll system – many have automatic increase
Heather A. Bailey, Esq.
SmithAmundsen LLC
Chicago, IL
(312) 894.3266
hbailey@salawus.com
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