Because someone is paid on a commission basis, in and of itself, does not mean they are not entitled to overtime pay or minimum wage. Rather, commission employees are often required to be paid overtime pay and minimum wage. The manner in which an employee is paid does not by itself exclude an employee from receiving overtime pay or minimum wage. Being paid on a commission basis affects the method of how the overtime pay is calculated. A commissioned employee is entitled to time-and-a-half of the regular rate of pay.
Determining The Regular Rate Of Pay For Commissioned Employees
Determining the regular rate of pay for a commissioned employee depends on the facts and circumstances. For example, when the commission is paid to an employee on weekly basis, the total amount earned (even non-commission wages) in the week is divided by the total hours worked in order to obtain the regular rate of pay. The employee is then paid an additional one-half times the regular rate of pay for all hours worked over 40. If after calculating the regular rate of pay it is concluded that the hourly rate is less than the minimum wage, there is a minimum wage violation.
As any commission employee can tell you, rarely are they paid their commissions on a weekly basis. More typically, commissions payments are deferred. There are many different types of deferred commission compensations plans being utilized by employers these days. Some of them are in compliance with current overtime pay and minimum wage laws. Many others may not be in compliance with current overtime pay and minimum wage laws.
While commission employees are generally entitled to overtime pay and minimum wage, some commission employees may not be entitled to overtime pay and minimum wage because they are what is known as “exempt” from overtime pay and minimum wage laws. For example, an employee of a retail or service establishment may not be entitled to overtime pay if he receives time-and-a-half of minimum wage for all hours worked and more than half his compensation represents commissions on goods or services. Such an employee may not be entitled to overtime pay for hours worked over forty (40) in a given workweek.
As the foregoing demonstrates, just because an employee is paid on a commission basis does not mean the employee is not entitled to overtime pay. If you are a commission employee and you have questions regarding your right to overtime pay or minimum wage you should contact our overtime lawyer in Orlado, FL. You can reach us by phone at at 407-835-8968 or fill out the online form located on our website.