If it is not possible or practicable to allocate the commission among the workweeks of the period in proportion to the amount of commission actually earned or reasonably presumed to be earned each week, some other reasonable and equitable method must be adopted. The following methods may be used:
(a) Allocation of equal amounts to each week. Assume that the employee earned an equal amount of commission in each week of the commission computation period and compute any additional overtime compensation due on this amount. This may be done as follows:
(1) For a commission computation period of 1 month, multiply the commission payment by 12 and divide by 52 to get the amount of commission allocable to a single week. If there is a semimonthly computation period, multiply the commission payment by 24 and divide by 52 to get each week's commission. For a commission computation period of a specific number of workweeks, such as every 4 weeks (as distinguished from every month) divide the total amount of commission by the number of weeks for which it represents additional compensation to get the amount of commission allocable to each week.
(2) Once the amount of commission allocable to a workweek has been ascertained for each week in which overtime was worked, the commission for that week is divided by the total number of hours worked in that week, to get the increase in the hourly rate. Additional overtime due is computed by multiplying one-half of this figure by the number of overtime hours worked in the week. A shorter method of obtaining the amount of additional overtime compensation due is to multiply the amount of commission allocable to the week by the decimal equivalent of the fraction
Overtime hours ————————
Total hours × 2A coefficient table (WH-134) has been prepared which contains the appropriate decimals for computing the extra half-time due.
Examples:(i) If there is a monthly commission payment of $416, the amount of commission allocable to a single week is $96 ($416 × 12 = $4,992 ÷ 52 = $96). In a week in which an employee who is due overtime compensation after 40 hours works 48 hours, dividing $96 by 48 gives the increase to the regular rate of $2. Multiplying one-half of this figure by 8 overtime hours gives the additional overtime pay due of $8. The $96 may also be multiplied by 0.083 (the appropriate decimal shown on the coefficient table) to get the additional overtime pay due of $8.
(ii) An employee received $384 in commissions for a 4-week period. Dividing this by 4 gives him a weekly increase of $96. Assume that he is due overtime compensation after 40 hours and that in the 4-week period he worked 44, 40, 44 and 48 hours. He would be due additional compensation of $4.36 for the first and third week ($96 ÷ 44 = $2.18 ÷ 2 = $1.09 × 4 overtime hours = $4.36), no extra compensation for the second week during which no overtime hours were worked, and $8 for the fourth week, computed in the same manner as weeks one and three. The additional overtime pay due may also be computed by multiplying the amount of the weekly increase by the appropriate decimal on the coefficient table, for each week in which overtime was worked.
(b) Allocation of equal amounts to each hour worked. Sometimes, there are facts which make it inappropriate to assume equal commission earnings for each workweek. For example, the number of hours worked each week may vary significantly. In such cases, rather than following the method outlined in paragraph (a) of this section, it is reasonable to assume that the employee earned an equal amount of commission in each hour that he worked during the commission computation period. The amount of the commission payment should be divided by the number of hours worked in the period in order to determine the amount of the increase in the regular rate allocable to the commission payment. One-half of this figure should be multiplied by the number of statutory overtime hours worked by the employee in the overtime workweeks of the commission computation period, to get the amount of additional overtime compensation due for this period.
Example:An employee received commissions of $192 for a commission computation period of 96 hours, including 16 overtime hours (i.e., two workweeks of 48 hours each). Dividing the $192 by 96 gives a $2 increase in the hourly rate. If the employee is entitled to overtime after 40 hours in a workweek, he is due an additional $16 for the commission computation period, representing an additional $1 for each of the 16 overtime hours.[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7310, Jan. 23, 1981]
Notes of Decisions
Cited in
13
cases (
5 in the last 5 years), 1974–2024 · leading case:
Chin v. Tile Shop, LLC, 57 F. Supp. 3d 1075 (D. Minnesota 2014).
Chin v. Tile Shop, LLC, 57 F. Supp. 3d 1075 (D. Minnesota 2014).
· cites it 2× “Pursuant to 29 C.F.R. § 778.120 , “[i]f it is not possible or practicable to allocate the commission among the workweeks of the period in proportion to the amount of commission actually earned or reasonably presumed to be earned each week, some other reasonable and equitable…”
Rogers v. Sav. First Mortg., LLC, 362 F. Supp. 2d 624 (D. Maryland 2005).
“” 29 C.F.R. § 778.120 . Plaintiffs’ proposed method of calculation essentially follows the method suggested in § 778.”
Schwind v. EW & Assocs., Inc., 371 F. Supp. 2d 560 (S.D.N.Y. 2005).
“” 29 C.F.R. § 778.120 . Section 778.120 further provides examples of what the Department of Labor deems reasonable and equitable and states that “[t]he following methods may be used.”
Sean Freixa v. Prestige Cruise Servs., LLC, 853 F.3d 1344 (11th Cir. 2017).
“Because part of Freixa’s remuneration included commission payments that were computed and earned monthly, the district court concluded that it was “not possible or practicable” to determine exactly how much Freixa earned in commissions in each individual week, 29 C.F.R. §…”
Powers v. Centennial Commc'ns Corp., 679 F. Supp. 2d 918 (N.D. Ind. 2009).
“The hourly increase resulting from the commission may be computed as outlined in [ 29 C.F.R. § 778.120 ]. (emphasis added). Centennial’s system of applying charge backs for customer cancellations on sales made months previously is authorized by this regulation.”
Merritt v. Texas Farm Bureau (W.D. Tex. 2023).
· cites it 3× “29 C.F.R. § 778.120 (a)(2)(i). Even where it is not possible to allocate commission for each workweek, the FLSA regulations use a 0.”
O'Bryant v. ABC Phones of North Carolina, Inc. (W.D. Tenn. 2020).
“) The dispute turns on whether it is practicable for VICTRA to do so because VICTRA is only required to allocate commission payments where it is practicable under 29 C.F.R. § 778.120 . (Id.) Whether the data necessary to allocate commission payments exists or whether it is…”
Noe v. Smart Mortg. Centers, Inc. (N.D. Ill. 2024).
“29 C.F.R. § 778.120 provides: If it is not possible or practicable to allocate the commission among the work- weeks of the period in proportion to the amount of commission actually earned or reasonably presumed to be earned each week, some other reasonable and equitable method…”
Peden v. Providence Title Co. (N.D. Tex. 2024).
“” 29 C.F.R. § 778.120 . Although not mandatory, this regulation provides two “reasonable and equitable” methods to properly allocate the commission in such situation.”
Scherer v. BOK Fin. Corp. (S.D. Tex. 2023).
“Both parties agree that 29 C.F.R. § 778.120 controls the applicable hourly overtime rate in this case.”
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