What is Commission Pay?
Commission pay is any compensation you receive that is based on your individual contribution to revenue.
The most common use of commission pay is with sales representatives. Their total compensation may be a combination of base salary and a percentage of the sales they make, or it may be commission only.
Other forms of incentive pay can also be considered commissions. For example, if you provide services on a fee for service basis, and are paid (in whole or in part) based on the revenue that the employer receives or invoices for your services, that is a form of commission pay.
Other forms of incentive pay- discretionary bonuses, profit sharing, or compensation based on the performance of a team or a department- are not based on your individual compensation, and are therefore not considered commissions.
Paying employees with commissions is acceptable under the law, but there are many ways in which a particular commission policy can run afoul of the wage and hour laws. For example, if the commissions plus base do not equal minimum wage, or account for overtime for non-exempt employees. There are also frequently issues with the timing of payment of commissions under the Massachusetts Wage Act.
Learn more here about commission pay under the Massachusetts Wage Act.
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