Commissions (whether based on a percentage of total sales or of sales in excess of a specified amount, or on some other formula) are payments for hours worked and must be included in the regular rate. This is true regardless of whether the commission is the sole source of the employee's compensation or is paid in addition to a guaranteed salary or hourly rate, or on some other basis, and regardless of the method, frequency, or regularity of computing, allocating and paying the commission. It does not matter whether the commission earnings are computed daily, weekly, biweekly, semimonthly, monthly, or at some other interval. The fact that the commission is paid on a basis other than weekly, and that payment is delayed for a time past the employee's normal pay day or pay period, does not excuse the employer from including this payment in the employee's regular rate.
[36 FR 4981, Mar. 16, 1971]
Notes of Decisions
Furry v. E. Bay Publ'g, LLC (2018)
calctapp5d
“For each overtime hour worked, the employee is entitled to an additional one-half the regular rate for hours requiring time and one-half and to an additional full rate for hours requiring double time.”
Corman v. JWS of N.M., Inc. (2018)
nmd
“" 29 C.F.R. § 778.117 . Although typically in retail or service establishments commission payments are keyed to sales, the requirement of the exemption is that more than half the employee's compensation represent commissions "on goods or services," which would include all types…”
Powers v. CENTENNIAL COMMUNICATIONS CORP. (2009)
innd · cites it 2×
“Since commissions are to be included in her regular rate, 29 C.F.R. § 778.117 , and overtime is to be calculated based on the regular rate, 29 U.”
Donovan v. Grantham (1982)
ca5
“29 C.F.R. § 778.117 (1981). In addition, the compliance officer’s testimony concerning Grantham’s payroll provided convincing evidence of past violations.”
Smith v. Family Video Movie Club, Inc. (2015)
ilnd
“29 C.F.R. § 778.117 . Plaintiffs allege that Defendant paid employees commission on certain sales but did not factor those payments into its calculation of overtime rates.”
Wai Man Tom v. Hospitality Ventures LLC (2018)
nced
“" 29 C.F.R. § 778.117 . Consistent with these regulations, the Seventh Circuit has held that "service charges" distributed to hotel and restaurant employees may be treated as commissions and used in their entirety to satisfy overtime requirements, in accordance with § 7(i).”
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