Commissioned employees
who are contesting the practice of “chargebacks” will get their day in court as
the result of a California Supreme Court decision not to review a recent
appeals court ruling.1 The case involved telemarketers who sold subscriptions to the Los
Angeles-based financial newspaper Investor’s Business Daily (IBD) and were paid
based on a point system that rewarded them for selling longer subscriptions,
winning daily sales contests, and meeting weekly sales goals.
The employees sought back
overtime, claiming that IBD misclassified them as exempt commissioned employees.
The employees also challenged IBD’s chargeback practice of deducting points
earned on a sale if the customer cancelled the subscription within 16 weeks.
The workers claimed that the chargeback practice violated California Labor Code
Section 221, which prohibits an employer from taking wages back from an
employee after they are earned. The suit also charged that the chargeback
practice violated
unfair competition law. The appeals court ruled that the employees could take
their case to trial on these issues.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
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1 Harris v. Investor’s
Business Daily Inc.,
Court of Appeals (Dist. 2) No. B178428, 2006