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Sullivan v. Sleepy's LLC

Supreme Judicial Court of Massachusetts, Suffolk

May 8, 2019

LAURITA SULLIVAN[1] & another[2]
v.
SLEEPY'S LLC & another.[3]

          Heard: February 4, 2019.

         Certification of questions of law to the Supreme Judicial Court by the United States District Court for the District of Massachusetts.

          Stephen S. Churchill (James D. Livingstone also present) for the plaintiffs.

          Diane M. Saunders for the defendants.

          Joshua D. Nadreau, Joseph W. Ambash, & Jeffrey A. Fritz, for Massachusetts State Automobile Dealers Association & another, amici curiae, submitted a brief.

          Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.

          KAFKER, J.

         The issue presented is whether retail salespeople who are paid entirely in commissions or draws (i.e., advances on commissions) are entitled to additional overtime or Sunday pay pursuant to G. L. c. 151, § 1A (overtime statute), and G. L. c. 136, § 6 (50) (Sunday pay statute). More particularly, we consider whether the defendant employers satisfied their obligations under these statutes when they paid draws or commissions that always equaled or exceeded the minimum wage for the plaintiff employees' first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday. We conclude that draws and commissions cannot be retroactively allocated as hourly and overtime wages and Sunday pay even if these draws and commissions equaled or exceeded the minimum wage for the employees' first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday. Rather, the employees are entitled to separate and additional payments of one and one-half times the minimum wage for every hour the employees worked over forty hours or on Sunday.[4]

         This case comes to us in the form of the following certified questions of first impression from the United States District Court for the District of Massachusetts:

"1. If a [one hundred percent] commission inside sales employee[5] works more than forty hours in a given work week, is the employee entitled to any additional compensation specifically for overtime hours worked when the employee's total compensation (through draws[6] and commissions) for that workweek is equal to or greater than 1.5 times the employee's regular rate or at least 1.5 times the minimum wage for all hours worked over [forty] hours in a workweek? If additional compensation is due, what is the employee's regular rate for purposes of calculating overtime pay?"

         We answer this question "yes." We further explain that the employee is entitled to one and one-half times the minimum wage times the number of hours over forty that the employee works in a work week.

"2. If a [one hundred percent] commission inside sales employee works on a Sunday in a given workweek, is the employee entitled to any additional compensation for Sunday premium pay when the employee's total compensation (through draws and commissions) for that workweek compensates the employee in an amount equal to or greater than 1.5 times the employee's regular rate or at least 1.5 times the minimum wage for all Sunday hours worked? If additional compensation is due, what is the employee's regular rate for purposes of Sunday premium pay?"

         We answer this question "yes." We further explain that the employee is entitled to one and one-half times the minimum wage times the number of hours the employee works on Sunday.

"The court also welcomes the advice of the Supreme Judicial Court on any other questions of Massachusetts law it deems material to the present action."

         Any additional guidance is provided in the course of answering the two questions presented.

         1. Facts.

         We take the following facts from the parties' stipulated facts and other uncontested material in the record. The plaintiff employees worked as salespeople at retail stores operated by the defendant employers between 2014 and 2016. The parties have stipulated that the employees were paid on a "[one hundred percent] commission" basis: their wages took the form of a recoverable draw of $125 per day, and any sales commissions in excess of the draw.[7] In other words, as their daily pay the employees received the greater of (1) the $125 recoverable draw or (2) earned commissions in excess of $125. On at least one occasion, the employees worked more than forty hours in a week, and they also worked on at least one Sunday. On these occasions, the employers did not pay the employees any additional compensation beyond the recoverable daily draw and any commissions. The amount of compensation the employees received, however, always equaled or exceeded the minimum wage times the number of hours they worked up to forty hours, plus one and one-half times the number of hours they worked over forty hours or on Sunday.

         In September 2017, the employees brought suit in the Superior Court, alleging that the employers' payment policies violated G. L. c. 149, § 148 (Wage Act), as well as the overtime and Sunday pay statutes. The employers argued as affirmative defenses that the employees had received all compensation to which they were entitled and specifically that their claims were offset by other compensation that they had received. The employers removed the case to Federal court based on the diversity of citizenship of the parties.

         2. Discussion.

         a. Relevant statutes ...


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