When it comes to properly paying employees who work overtime and receive commission, it is easy for some people to fall through the cracks in terms of being paid properly for the work they have done. In fact, it has been reported that 54 percent of American workers have experienced a paycheck error in some capacity during their careers. Some employees are paid on a straight commission basis or get commissions in addition to their regular hourly or salary pay. In either case, unless an exemption applies (see below), commissions must be included when determining the regular rate of pay for overtime purposes. Commissions are added to the employee’s other earnings for the week, if any, then this total is divided by the total hours worked to determine the employee’s regular rate to be used in the overtime calculation.
The commission pay overtime lawyers at Lore Law Firm have extensive experience helping clients understand whether or not they are being paid correctly. For over 25 years, our skilled legal team has helped protect worker’s rights by assisting them in the claims process to pursue the pay they are owed. We understand that it can be overwhelming and stressful to file a claim against a person’s employer. That is why our knowledgeable attorneys are proud to provide personalized and trusted legal counsel to our clients.
What are the Different Overtime Pay Calculations?
Table of Contents
- 1 What are the Different Overtime Pay Calculations?
- 2 What Does an Average Breakdown of Pay Calculation Look Like?
- 3 What are Exemptions From the Overtime Law?
- 4 Contact a Commission Pay Overtime Lawyer
There are many employees who are underpaid by their employers without even knowing that they are missing part of their paycheck. That is why it is important for employees to understand how different overtime pay is calculated. The following are common examples of how overtime pay is calculated:
Overtime Pay Calculation If Paid Commission Only
If an employee who has worked overtime is only paid commission, the calculation may look like this:
Example Overtime Pay Calculation if paid Commission only
- Weekly Commissions = $850
- Total Hours = 50
- Regular rate = $850 / 50 hours = $17 per hour
- Commission Pay = $850
- Overtime Pay = $17 x .5 x 10 hours = $85
- TOTAL Weekly Pay = $935
Example Overtime Pay Calculation if paid Hourly plus Commissions
- Hourly Rate = $15 per hour
- Weekly Commissions = $100
- Total Weekly Hours = 50
- Regular rate = $15 x 50 hours = $750 + $100 commissions = $850 / 50 hours = $17 Regular Rate
- $17 x 40 hours = $680 Regular Pay
- $17 x 1.5 x 10 hours = $255 Overtime Pay
- TOTAL Weekly Pay = $935
What Does an Average Breakdown of Pay Calculation Look Like?
Most employees are not the ones doing the payroll each week. That is why it can be difficult to know if your employer is paying you correctly for any commission you earned while working overtime. The following calculation show how a payroll system may breakdown the pay of an employee who is owed commissions and overtime pay:
- Hourly Pay = $15 x 50 hours = $750
- Commission Pay = $100
- Overtime Pay = $17 (regular rate with commissions included) x .5 x 10 overtime hours = $85
- TOTAL Weekly Pay = $935
If you are unsure if your employer is paying you properly, a commission pay overtime lawyer may be able to help.
What are Exemptions From the Overtime Law?
Some commission-based jobs may be exempt from the overtime law and not entitled to overtime pay. Two different overtime pay exemptions may come into play for employees who are paid commissions.
Commission Sales Exemption
This exemption is commonly referred to as the 7(i) Exemption. For this exemption to apply to a position, 3 conditions must be met:
- The employee must be employed by a retail or service establishment.
- The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked.
- More than half the employee’s total earnings in a representative period must consist of commissions.
Outside Sales Exemption
For this exemption to apply to a position, the following tests must be met:
- The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
- The employee must be customarily and regularly engaged away from the employer’s place or places of business.
If you are unsure if your position falls under either exemption, an experienced commission pay overtime lawyer may be able to help.
Contact a Commission Pay Overtime Lawyer
If you believe you have been underpaid by your employer for commission pay overtime, you deserve to pursue the financial compensation you are owed. To get help with your claim, contact a commission pay overtime lawyer.
Lore Law Firm is a commission pay overtime law firm dedicated to protecting worker’s rights. Our firm is proud to offer clients over 25 years of experience and the dedicated representation they deserve. To get started with a free and confidential review of your claim, contact us here or call (713) 782-5291.