In the case of Mitchell v. NBT Bank, N.A., employee Christie Mitchell appealed a summary judgment order in favor of NBT Bank, N.A., concerning the bank’s policy of deducting her overtime compensation from her commissions. The bank’s policy ensured that Mitchell was never paid more than her gross commissions, regardless of the number of hours she worked in a week.
Mitchell, a mortgage loan originator, was paid on a commission-only basis by the bank. She received a bi-weekly draw against her future commissions. At the end of each 4 weeks, the bank calculated her “regular rate” for weeks with overtime hours. They deducted her draw wages and additional overtime premiums from her gross commission, paying her the remaining amount. If her gross commission didn’t exceed her draw and additional overtime premium, the negative balance carried over to the next period. Mitchell raised concerns about this payment method but took legal action after leaving the bank, alleging violations of the FLSA and Vermont’s wage law.
The superior court granted summary judgment in favor of the bank, noting that the issue at hand was whether the FLSA required the bank to pay Mitchell overtime wages in addition to her gross commissions. The court concluded that there was no categorical prohibition in the FLSA or its regulations against deducting overtime wages from gross commissions. The court performed calculations based on relevant regulations to demonstrate that the bank’s methodology complied with the FLSA.
On appeal, Mitchell reiterated her argument that the FLSA required the bank to pay her overtime wages on top of her gross commissions. She claimed that the bank’s practice of deducting overtime wages from commissions violated the FLSA. However, since the FLSA does not mandate such a requirement, the court affirmed the summary judgment in favor of the bank.
Key lessons from this case:
- A draw refers to an advance or prepayment given to an employee against future earnings or commissions.
- Deducting overtime wages from gross commissions is not prohibited by the FLSA as long as the minimum wage and overtime premiums are met.
- The FLSA does not specifically require employers to pay gross commissions in addition to overtime wages.
If you want to know more about overtime regulations, read our guide on Vermont Overtime Laws.
