Total commissions earned being paid as minimum wage + expense reimbursement

[anonymousdrive]

I am an at will employee for a courier company in Michigan. I am a delivery driver and use my own vehicle on the job. I am strictly commission, no base pay, earning a % of the revenues per job I complete. The verbal agreement upon accepting employment was that I would earn 43% commission per job I complete plus business mileage reimbursement at the standard federal rate. I am required to report my business miles and hours worked on a weekly basis. I also receive weekly commission reports showing the jobs I did and the pay earned per job.

However, I am not compensated as agreed. On my pay checks my employer pays the first $296.00 as wages (40 hrs @ $7.40/hour) and the balance of my gross earnings as mileage reimbursement.

For example if I earned $650.00 in commissions over the course of a pay period, worked 40 hours, and drove 1200 miles: My pay check will show $296 commission (taxable income) + $354.00 reimbursement (non-taxable).

The drivers don't discover the true compensation set up until they receive their first pay checks. When they ask for clarification the company's response is, "we do it this way so you don't pay a lot of taxes."

My question(s): Is the company operating within the limits of federal/state law? There appears to be some tax evasion(s) on the company's part...unemployment insurance taxes for one. Improper reporting of earnings...aren't commissions earned fully taxable? I would imagine the "reimbursement" the company pays out is a write off for the company. Which federal and/or state agencies should I contact as far as an investigation would be concerned? U.S. DOL, IRS, State Wage/Labor Divison, State Unemployment Office, State Treasury? All of the above?

 

[Grover]

I don't know if this is helpful information, but thought I'd add it anyway.

 

[tpajet]

I'm not sure the full benefit for them, but from your end, they are right that it means you will pay less income tax on the whole. You could report it, but what good would it really do? You don't have anything stating that you were really supposed to be commission, so no way to really prove they are paying differently than agreed. You might be able to catch some attention with the actual amount of reimbursement, but again, you would be in a situation of having to do a lot of work to prove very little, and in the end would probably end up loosing your job.

As for not paying your real full share of taxes, there's not much you can do. You really can't go to the IRS and say "I'd like to contribute more because my employer is actually cheating the system" - you still end up without a job, and opening up a #10 can of worms to catch one minnow.

It's really too much of an uphill battle to take, and in the end YOU end up loosing. So the best thing is just go along, and if you really feel that you are cheating the system, then take the extra that you would have paid in taxes, and go spend it at some small business, and do your part to help the economy, or donate it to charity.

 

[cbg]

I am by no means convinced that the practice you describe is legal. I would discuss it with the state or Federal DOL. It is my understanding that ONLY outside salespeople can be paid on straight commission.