Commissions must be included in calculating the regular rate when determining overtime compensation. All commissions must be included in the calculation of total wages paid, regardless of whether the commission is the sole source of the employee’s compensation or is paid in addition to a guaranteed salary or on some other basis. 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 does not excuse the employer from including this payment in the employee’s regular rate.
The overtime payment must be made above and beyond the commission. In other words, employers may not treat overtime compensation as a draw against commissions. Overtime is a premium, paid to employees for working in excess of 40 hours in a workweek. Moreover, nonexempt employees still must make at least the minimum wage of $7.25 per hour, even when paid pure commissions. If your commissions add up to less than the minimum wage in any given week, your employer may be violating the Fair Labor Standards Act (FLSA).
Like commissions, non-discretionary bonuses must be included in the regular rate for calculating overtime. Nondiscretionary bonuses are bonuses paid pursuant to some sort of plan. Most common, they arise in the form of performance based bonuses, where employees earn an additional bonus for productivity or good performance. When the employee earns a non-discretionary bonus, the employer must include these monies when calculating how much overtime compensation to pay employees. Likewise, this premium must be paid in addition to the bonus, and may not be paid from the bonus monies themselves.
The experienced FLSA attorneys at Brady & Associates can advise you with regard to whether you are being underpaid. To set up a free phone consultation, call us at (913) 696-0925 or contact us online. We are based in Overland Park, and serve clients throughout Kansas and Missouri, as well as throughout the United States.