The Sales Incentive Compensation Act originated in the House of Representatives.
The Sales Incentive Compensation Act (H.R. 2070) was introduced during the 107th Congress. It was sponsored by the Republican Party, and had 12 cosponsors.
Background
Representative Patrick Tiberi (R-Ohio) sponsored the Sales Incentive Compensation Act as a way of fostering maximum income potential among sales employees. Introduced in 2001, the act was based on the belief that current law hinders salespeople from reaching their full earning potential by not accounting for recent advancements in technology.
Current law exempts traveling sales staff from earning overtime pay. Those that work in "inside sales" are covered. Now that more sales activity can happen without leaving the office due to things such as the Internet and faxes, the act was crafted to suspend overtime coverage for certain "inside sales" staff. Instead, the act proposed compensating qualifying employees with the standard base pay and a guaranteed commission on closed sales.
Significance
The Sales Incentive Compensation Act would have been an amendment to the Fair Labor Standards Act for a specific group of inside sales employees. This signified a direct attempt to alter employment laws in the name of technological advances. Although the stated goal was to increase sales staff income, the danger was in the potential for employers to abuse the act to get longer work hours without paying overtime for them.
Who The Act Would Affect
The Sales Incentive Compensation Act didn't call for a wide, sweeping change of current compensation laws. On the contrary, it is estimated that roughly 923,000 sales workers would be affected by its implementation.
The primary reason for this relatively small number of beneficiaries is because of the stringent rules for qualification. Sales staff must demonstrate a deep knowledge of client needs and/or specialized knowledge about the employer's products and services in order to qualify. This is in addition to other considerations, including a base pay minimum and a guaranteed commission of at least 40 percent of the employee's wage.
Misconception
Some may see the act as a way for employers to alter the outcome of employment negotiations with unions. In effect, the theory goes, the employers could use the act to perpetuate unfair labor practices, and also as a bargaining tool during collective bargaining negotiations that have reached an impasse.
This is a misconception. According to John E. Peterson, former Republican Representative from Pennsylvania, the act was carefully worded to keep it from being used as a tool to alter natural bargaining processes between employers and unions. There were also safeguards in place to deter its use in helping employers engage in unfair labor practices.
Outcome
The Sales Incentive Compensation Act never became law. It was referred to committee, but was never reported on or advanced. Since all proposed bills are cleared when sessions of Congress end every two years, H.R. 2070 was cleared and has not been reintroduced.
Tags: Incentive Compensation, Sales Incentive, Sales Incentive Compensation, inside sales, guaranteed commission