Washington Employment Case Law Update: Retail Business Includes Sales to Other Businesses

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Washington Employment Case Law Update: Retail Business Includes Sales to Other Businesses

From the desk of John M. KreutzerWashington’s Minimum Wage Act requires employers to pay employees an overtime rate for any hours worked over 40 hours per week.  However, the MWA exempts employees who work for a “retail or service establishment” if their regular rate of pay exceeds one and one-half times the minimum wage and more than half the employee’s compensation represents commissions on goods or services.  In this case, the Washington Supreme Court evaluated whether a company that rents and services linens and uniforms is properly understood as a “retail or service establishment” for purposes of the Minimum Wage Act.

Claims Pointer: In this case arising out of a wage dispute, Washington Supreme Court held that under the statutory requirements of the Minimum Wage Act, the “retail or service” overtime exemption extended to businesses where its customers are other businesses, provided its sales are not for resale and recognized in the industry as retail.  The case examines the application of the overtime exemption and provides guidelines for determining whether an employer is a “retail or service establishment” under the Minimum Wage Act.

Cooper v. Alsco, Inc., No.91801, Washington Supreme Court, (August 4, 2016).

Alsco, Inc. (“Alsco”) is a textile rental and sales company in the business of supplying uniforms, linens, and other products to other businesses in a variety of fields.  It provides no products or services for resale.  Pursuant to a collective bargaining agreement (“CBA”), it allows its employees to choose to be paid hourly or by commission with a base salary.  For those employees that choose commission, the commission comprises over half their total pay.  The commissioned employees are not paid greater compensation for hours they work over 40 in a week.

A class of commissioned delivery employees sued Alsco under...

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