Sixth Circuit Deems Unlawful a Policy Requiring Employees to Repay Advanced “Draws” Upon Termination

The employer, hhgregg, Inc., has a compensation system where the sales employees (non-exempt) are paid commissions.  They are advanced a “draw” in any week in which they do not make enough sales to have the commission payments cover the minimum wage requirements.  The “draw” is then deducted from future commissions.  Upon termination, the employee – per policy – is required to immediately repay any outstanding draws.

A collective action was brought against hhgregg, and various wage and hour claims were asserted.  We are going to focus on one.

Interestingly, the employees did not focus on the policy which required them to repay any outstanding “draws” upon their termination.  In fact, the company represented it did not enforce that part of the policy.  But, the Court of Appeals found it quite interesting. Continue reading