At Leeds West Groups, the 7(i) overtime exemption is applied in accordance with the Fair Labor Standards Act (FLSA) and applies only to eligible commission-based roles.
Quick Answer
The 7(i) overtime exemption applies to eligible commission-based roles and is determined through periodic testing that evaluates earnings and hours worked. Exemption status is not permanent and may change over time based on testing results.
Who Is Eligible for the 7(i) Exemption?
The 7(i) exemption may apply only if all required criteria are met, including:
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The role is part of a retail or service (automotive) establishment
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The team member is paid under an eligible commission-based or “Hourly OR Commission” pay structure
Eligibility is based on pay structure and job design, not job title alone.
How Is 7(i) Exemption Status Determined?
7(i) exemption status is determined through testing of specific pay periods. For a pay period to qualify, all required conditions must be met, including:
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The team member is actively employed for the full pay period
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The team member works at least the minimum hours required for testing
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More than 50% of total earnings for the tested period come from commission pay
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The team member’s effective regular rate of pay exceeds 1.5 times the applicable minimum wage
If any required condition is not met, the pay period does not qualify for the 7(i) exemption.
When Does 7(i) Testing Occur?
7(i) testing may occur during the following situations:
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New Hire Testing: During the initial eligible pay periods after hire
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Qualifying Event Testing: After certain changes, such as a transfers, role changes, or newly eligible pay structures
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Annual Testing: Conducted periodically to ensure continued compliance
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IMPORTANT NOTE: To protect the integrity of the testing process and ensure accurate, unbiased results, LWG does not publish or advertise specific 7(i) testing dates or testing windows.
When Does a 7(i) Exemption Status Change Take Effect?
If a change in 7(i) exemption status is identified through testing:
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The new exemption status becomes effective on the first pay period following the completion of the applicable testing period.
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Exemption status changes are not retroactive.
How Does the 7(i) Exemption Affect My Pay?
When the 7(i) Exemption Applies
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Overtime pay is not required for that pay period, even if more than 40 hours are worked
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Pay is issued based on the applicable Hourly OR Commission calculation
When the 7(i) Exemption Does Not Apply
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Overtime pay is calculated and paid in accordance with federal and state law
Important Things to Know
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7(i) exemption status can change over time
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Exemption is based on actual earnings and hours worked within a test window, not estimates or averages
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HR determines exemption status using objective testing criteria in compliance with FLSA standards
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Supervisors cannot manually assign or override the exemption status
Need More Help?
Our HR team is here to offer support and guidance. If you have questions about the 7(i) exemption, how it is determined, or how it affected your overtime for a specific pay period, you are always welcome to reach out. You can submit a ticket anytime by visiting: https://leedswestgroups.happyfox.com/new/
