How is it legal to hire "commission only" sales people?

[melm00se]

15. if you work a "commission only" gig

most (if not all) companies pay what is called a "recoverable draw".

you get paid an hourly salary but that salary is offset by your earned commissions.

let's take a normal work week: 40 hours

week #1

40 hours @ $10/hour (your draw) = $400
During that week, you are a stellar salesperson and earn $850 in commission.


Week #2

40 hours @ $10/hour (your draw) = $400
During that week, you have a bad week and earn $275 in commission.

Week #3

40 hours @ $10/hour (your draw) = $400
During that week you break even with $400 commission

Week #4

40 hours @ $10/hour (your draw) = $400
you hit a homerun and earn $2000 in commission


Your paycheck will look like this:

Salary: $1600
Earned commissions: $3525
total gross pay: $1925

If you have a bad string of weeks, you can end up going into the hole and "owe" back the money drawn against future commissions but with a draw you are guaranteed a $400/week paycheck.

What happens if you leave the company with a negative balance in your (recoverable) draw account? technically you owe the money back but after 20+ years in sales, I have only seen a company go after someone for the draw balance once and that was because they rolled up the draw balance into a civil suit over another, more serious, matter.

working on commission is extremely challenging but can be extremely lucrative if you are a good salesperson even if you are part time. I managed the computer dept for a (now defunct) department store and I had a kid (20 years old) who earned almost $3000 on weekend afternoon 2 weeks before Christmas (and this was back in the early 90's)