How Do the Overtime Laws Affect Employees Paid on Commission?
Overtime Requirements for Commission-Based Employees
If you do not fall into one of the federal or state exemptions to overtime, you should be paid time and a half for all hours worked in excess of 40 each week, even if you are paid solely or primarily on a commission basis.
In the past, employers had argued that commissions earned on top of base wages could be credited toward this overtime requirement. In other words, if you were paid $15.00 an hour, worked 50 hours in a week, and earned commissions at least equal to $225 (time and a half for the additional ten hours), you were not required to be paid the increased hourly rate for those ten hours as well.
A 2019 decision by the Massachusetts Supreme Judicial Court, however, changed this calculus. The court held that commissions could not be credited toward the time and a half requirement. This means in the above example you should have been paid an additional $7.50 for each of the ten overtime hours, in addition to your earned commissions.
The court also made clear that in all events employees must earn at least 1.5 times the minimum wage for hours over forty, regardless of commissions. This would mean if you were a commission only employee you must earn at least $14.25 an hour for the first 40 hours in a week, and $21.37 per hour for hours over forty ($15.00 and $22.5, respectively, in 2023 when the minimum wage increases again).
Learn more here about overtime laws.
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