My sister is telling me this story that doesn’t make sense to me about her employer and her commission. I’m hoping to make sense of it by getting a few questions about selling at a retail store on commission.
She got a detailed statement from her employer (a furniture reatailer)about the status of what she calls her “draw” account. At first she said that she “owes” them about $1k, and later she said she didn’t. As close as I can tell, she was hired on 100% commission, with no base salary at all. However, she signed up for this account when she was hired that would maintain her pay check at minimum wage levels, even if she did not earn that much commission. The money would be paid back out of future commissions. Now her account is at about a thousand in the hole.
Then she said, “I never have to actually pay it back. Whatever commissions I earn will just be put against this balance, and I can continue to draw minimum wage”. During which, apparently, this balance will continue to grow because she isn’t earning enough to cover minimum wage now.
So I asked her. “If you quit today, do you have to pay this amount back?” “No”, she said, and a liitle back and forth told me she’s convinced this is not a debt and it won’t matter when she’s gone on to another job. Something akin to a note on her personnel file, not a debt they can take her to court over. She said it was common at stores like Penny’s and Eddie Bauer.
Can someone enlighten me on common practices in the industry. I don’t trust my sister’s judgement on this, as she managed to accept the job and show up for the first day of work not understanding there was no base salary.