How to Calculate Overtime Pay Commission Salary
The Fair Labor Standards Act requires employers to pay nonexempt commissioned employees overtime for hours worked during a workweek in excess of 40 hours. This applies to all nonexempt employees including those who only receive a commission-based salary. You can manually calculate the overtime pay due to the commissioned employee with some basic information about the commission earned by the employee and the number of overtime hours worked.
Determine the commission earned and the current commission period. For example, assume an employee earned a $5,000 commission for a four-week period.
Convert the commission to a weekly commission figure. Divide the commission amount by the number of weeks in the commission period. Continuing the same example, $5,000 / 4 = $1,250.
Determine the number of hours of overtime worked in the week. Subtract 40 from the actual number of hours worked. For example, assume an employee worked 50 hours. Thus, 50 - 40 = 10 overtime hours.
Divide the weekly commission figure by 40 to determine the hourly pay rate. Continuing the same example, $1,250 / 40 = $31.25.
Multiply the hourly rate by 1.5. Continuing the same example, $31.25 x 1.5 = $46.88. This figure represents the overtime pay rate for the commissioned employee.
Multiply the overtime pay rate by the number of overtime hours. Continuing the same example, $46.88 x 10 = $468.75. This figure represents the overtime pay for the commissioned employee.