In Vaquero v. Stoneledge Furniture, LLC, the Court of Appeal overturned the trial court’s grant of summary judgment to defendant employer regarding Plaintiffs’ causes of action involving unpaid rest periods, unpaid wages upon termination, and unfair business practices. The Court declared that the trial court was incorrect in holding that Wage Order No. 7 – which requires employers to pay employees at least the minimum wage for all hours worked, including rest periods – does not apply to employees paid on commission. The Court reasoned that the plain language of the Wage Order requires that employees paid on commission be compensated separately for rest breaks.

Furthermore, the Court held that the employer’s system of keeping track of all hours worked, including rest periods, and paying a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods, was impermissible. The Court reasoned that the employer did not include a component that directly compensated sales associates for rest periods. Employees were either paid on commission when their sales during the relevant paid period exceeded the minimum hourly wage – these employees received the same compensation whether or not they took rest breaks – or they were paid on a minimum hourly rate for all time spent working, including for rest breaks, but the company took back this compensation in later pay periods once the relevant employees began making more sales.

While this case is limited to its facts, it does establish that sales employees paid on commission are entitled to separate compensation for rest breaks and that employer-implemented standards of accounting for such breaks will be subject to scrutiny by the courts.

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