DOL blows whistle on insurance company's commission-only compensation

Premier Insurance Services recently agreed to a settlement with the United States Department of Labor that will require its branches throughout California to deploy a timekeeping system to avoid future time and attendance issues. The DOL's Wage and Hour Division (WHD) recently found the employer was paying its workers on a commission-only basis that left some employees shortchanged.

"Paying employees on a commission-only basis does not give employers a green light to dodge minimum wage and overtime pay requirements," said Priscilla Garcia, director of the West Covina District Office. WHD investigators claim some workers were not receiving minimum wage because of the payment plan.

In addition to its agreement to comply with the Fair Labor Standards Act's (FLSA) most basic measures, including minimum wage, overtime and recordkeeping, the employer will also have to pay its workers $42,297 in back wages, an equal amount in liquidated damages and $32,976 in civil penalties.

The DOL also reports that some insurance companies have run into payroll issues where employee classifications are concerned. The Acting Administrator in 2009, Alexander J. Passantino, explains that some insurance company employees may fall under administrative or outside sales exemptions, which can alleviate employers from having to pay them overtime.