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My question involves employment and labor law for the state of: Florida
The employer is paying a weekly draw against commission to commissioned salespeople. Then, when commissions are due, the employer charges against the commissions the draws paid plus an additional 30 percent. Example: Pays a draw of $500 per week. In a month (four weeks), Employee makes sales earning a commission of 2% totaling $5000 ($250,000 sales). The employer charges the employee for the four weekly draws not $2000, but $2600, thus issuing payment to the employee of $2400 (before deducting the employee's FICA, Medicare, income taxes, and authorized deductions for health insurance, etc.) in commissions on the $5000 commission earned.
The employer says that the 30 percent deducted from the commission rate is for the costs of employing the salesperson: for example, worker's compensation, errors and omissions insurance, the amounts the company pays for the employee's health insurance (above what the employee pays and authorizes), the company's portions of federal and state unemployment tax, the employer's social security tax. In short, the employer is charging the salespeople for the costs the employer takes on by employing the salespeople by deducting from their commissions 30 percent more than the draws paid them. The deduction is not itemized except as recovery of draw.
The salespeople's commission schedule specifies that the rate of commission is 2% (for example), and their entire compensation is commission (assuming, of course, that they make enough in sales to earn commissions greater than 130% of the draw). Due to the 130% of the draw being recovered, however, it is impossible for the salespeople to actually be paid the total commission rate.
In addition, the salespeople's contract states that "You shall not be liable to us for any expenses incurred in the operation of our business." However, worker's compensation premiums, unemployment taxes, Social Security taxes, E&O insurance, health insurance, are definitely expenses of the business.
Is this employer's practice legal?