United States: California Court Holds That Employees Paid On Commission Are Entitled To Separate Compensation For Rest Periods

On February 28, 2017, the California Second Appellate District issued a decision in Vaquero v. Stoneledge Furniture, LLC (February 28, 2017) No. B269657, Calif. App., 2nd Dist., Div. 7, finding that an employer must separately compensate commissioned employees for rest periods. The Court began by answering the following questions:

Are employees paid on commission entitled to separate compensation for rest periods mandated by state law? If so, do employers who keep track of hours worked, including rest periods, violate this requirement by paying employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods? We answer both questions in the affirmative...

Although not part of this case, Vaquero's holding will likely be extended to all non-selling activities, such as time spent in meetings, on certain types of training, as well as rest periods. This is a devastating decision for California employers who compensate employees based on commission-only or draw-against-commission plans.

Commission Plan/Commission Draw

Many businesses employing commissioned employees utilize a draw against commission. A draw against commission, or commission draw, is a salary plan based completely on an employee's earned commission that allows the employee to receive a regular paycheck based on their future commissions. Under such plan, an employee is advanced a set amount of money as a paycheck at the start of a pay period or sales period. At the end of the pay period or sales period, the draw is deducted from the employee's commission.

In Vaquero, Stoneledge Furniture (more commonly known as Ashley Furniture HomeStores) utilized a commission plan where Stoneledge paid a sales associate a draw against future advanced commissions if the associate failed to earn "minimum pay" of at least $12.01 per hour in commissions in any pay period. The commission plan did not provide separate compensation for any non-selling time, such as time spent in meetings, trainings, and during rest periods. Sales associates recorded their time using Stoneledge's electronic timekeeping system by clocking in and out during the start and end of their shifts and for meal periods. Sales associates did not clock out for rest periods.   

The Court of Appeal's Analysis

Stoneledge argued that its compensation plan was not in violation of California law, including Wage Order No. 7, because it paid its sales associates a guaranteed minimum for all hours worked, including rest breaks. The court disagreed and looked to the plain language of Wage Order No. 7 and its interpretations by California appellate and federal courts to conclude that commissioned employees must be separately paid for rest breaks if an employer's compensation plan does not account for minimum hourly wage for such time.

The court first considered the plain, unambiguous language of Wage Order No. 7. Wage Order No. 7 applies to all persons employed in the mercantile industry whether paid on a time, piece rate, commission, or other basis. It requires employers to count rest periods as hours worked for which there shall be no deduction from wages.

The court then turned to another California Court of Appeal decision in Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864 interpreting this language for guidance. In Bluford, the court interpreted this language to require employers to separately compensate employees for rest breaks where the employer uses an activity-based compensation system (as known as a "piece-rate" plan) that does not directly compensate for rest periods. Bluford involved Safeway truck drivers who sued Safeway for failing to provide rest periods, among other claims. Safeway used a piece-rate compensation system where it paid its drivers based on mileage rates determined by miles traveled, the time when the trips were made, and the locations where the trips began and ended. Safeway contended that its compensation system incorporated payments for rest periods into the mileage rates. The court found that it did not, and held that piece-rate compensation plans, such as Safeway's, violated California law because they do not directly account for rest periods and nonproductive time during which employees cannot earn wages. Accordingly, these compensation plans also violated the applicable wage order (similar to Wage Order No. 7) which prohibits employers from deducting wages for rest periods. Along with Bluford, the court here also relied on a string of federal court cases that have considered this issue of California law and reached a similar conclusion, to support its findings that commissioned employees are entitled to paid rest periods under Wage Order No. 7.

While neither Bluford nor the federal cases applying California law involved commissioned employees, the court here nonetheless found that the same line of reasoning applied to piece-rate compensation plans equally applied to employees paid on commission, who are not separately compensated for rest periods. When Stoneledge paid an employee only a commission, that commission did not account for rest periods. When Stoneledge compensated an employee on an hourly basis, the company took back that compensation in later pay periods. In neither situation was the employee separately compensated for rest periods, since taking back money paid to the employee effectively reduced either rest period compensation or the contractual commission rate. 

Thus, by way of Wage Order No. 7 and Bluford, the court held that a commission-based compensation plan must separately account and pay for rest periods to comply with California law. And because Stoneledge did not separately pay its commissioned employees for rest periods under its commission plan, it was in violation of California law.


The Vaquero decision is demoralizing for California employers and will undoubtedly result in a flood of wage and hour litigation against companies who utilize commission-only or draw-against-commission payment schemes. All employers who utilize such payment plans are advised to seek legal counsel. Your dedicated team of employment attorneys at Lewis Brisbois is standing by to assist your business in navigating through this latest legal development.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.