Summit Retail Solutions, Inc. helps companies market their products, sometimes with in-store demonstrations, samples, or sales pitches by brand representatives. The complaint for this class action alleges that brand representatives were encouraged by the company’s pay structure to under-report their hours worked per week. They were therefore not paid for all hours worked and not paid overtime.
The class for the collective action under federal law is all similarly-situated persons who worked for Summit as brand representatives or senior brand representatives. The classes for this action under the various state laws is current and former employees of Summit who worked as brand representatives or senior brand representatives who were not paid overtime for hours worked over forty in a week.
Brand representatives perform demonstrations at stores, such as BJ’s, Sam’s Club, and Costco. They have to set up demonstration displays before their shifts begin and break them down when their shifts are over. They’re also required to take part in weekly conference calls about company policies and marketing techniques and sales strategies for products. To do all of this, the plaintiffs for this class action claim, they needed to work more than forty hours per week.
So why did they under-report their hours? The complaint says Summit had a complicated pay structure that involved commissions but was not a true commission program and that encouraged the underreporting.
According to the complaint, this is how it worked: The brand representatives’ pay was first figured on an hourly basis. They were also able to receive commissions based on a percentage of sales generated from the products they marketed, but this is where it gets complicated.
Each week, the value of that percentage was balanced against the pay they’d racked up on an hourly basis. This was known as “the ledger.” If the percentage-of-sales amount was higher than their hourly pay for the week, the ledger was said to be positive; if it was lower, the ledger was said to be negative. At the end of the month, if the ledger for the month was positive, the brand representatives were given a commission related to the value of the ledger. If the ledger for the month was not positive, they did not receive any commissions, even for the weeks when the ledger was positive.
The complaint claims that the brand representatives rarely received commissions because the sales goals were unrealistic. But, it says, if brand representatives maintained negative balances for an extended period, they could be subject to negative consequences, such as disciplinary action or termination. Brand representatives therefore had incentive to under-report their hours, in the hopes that a smaller paycheck would make the ledger positive and keep them from the negative repercussions.
The complaint claims that Summit has violated the Fair Labor Standards Act and labor laws in the states of Maryland, Pennsylvania, and New York.