Paying Outside Sales Employees Purely on Draw and Commission

Many companies find it to be advantageous to pay outside sales employees purely on commission.  In order to ensure outside sales employees are financially stable, many companies use a recoverable draw against commission system.   Outside sales employees, who spend more than half their time away from the office engaged in selling activities, may be paid on a draw against commission basis because the minimum wage law does not apply to outside salespersons. Note – This is not true for inside sales employees in California and elsewhere.  In a recoverable draw against commission system, at the start of each pay period, an outside sales employee is advanced a specific amount of money – the "recoverable draw." This recoverable draw is then deducted from the sales employee’s commission at the end of each pay period. After paying back the recoverable draw, the employee keeps the rest of the money. A draw against commission is regular pay an employer…

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