U.S. DOL Says OEM Incentives Can Count Toward Minimum Wage

Earlier this summer, the U.S. Department of Labor issued an opinion that, in most cases, auto dealerships can include OEM incentive payments towards their requirements to pay non-exempt sales employees the standard state/local minimum wage in their jurisdiction.

Likening the OEM incentive payments to tips, the DOL stated that, when third-party incentives are included (either explicitly or implicitly) as part of an employment agreement and communicated to a worker prior to performing sales duties, they can count towards a minimum wage obligation.

We encourage all dealers to include language related to third-party incentives in standard employment agreements for sales personnel, and to refer to the DOL opinion letter above as a way to establish a good-faith defense against potential wage disputes. NADA has also created a helpful guide to federal wage and anti-discrimination compliance (visible to members only), which we encourage you to review.

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