Blog Post

Oct 20, 2017

Sixth Circuit Cries Foul on Post-Termination Repayment of Recoverable Draw

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Seyfarth Synopsis: A common feature of many a commission plan is the recoverable draw that is offset against future commissions. The DOL has long held this is a permissible way to satisfy the minimum wage requirement. In a recent decision, the Sixth Circuit agreed, up to a point—the point of termination. It concluded that requiring employees to repay the draw post-termination ran afoul of the FLSA’s requirement that the minimum wage be paid “free and clear” because the practice is akin to an unlawful kickback of paid wages. The Sixth Circuit punted the case back to the district court even though the employer had never actually enforced the repayment policy. The remanded case also includes Plaintiffs’ claims that they were pressured to work off the clock in order to lower the weekly draw payments.

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