How Overtime Works for Commission-Based Employees
October 23, 2026
A non-exempt employee paid partly or entirely on commission is still generally entitled to overtime, with commissions earned during the relevant period typically factored into the regular rate used for the overtime premium calculation — similar in principle to how non-discretionary bonuses are treated.
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Being paid by commission is a compensation structure, not an FLSA exemption category by itself — a commission-based employee's exempt or non-exempt status still depends on the same duties and salary-level tests covered in the dedicated article on exempt vs. non-exempt classification elsewhere in this series.
General Approach to the Calculation
For a non-exempt commission-based employee, total earnings for the period (including commissions) are generally divided by total hours worked to find the regular rate, which is then used to calculate the overtime premium owed for hours over 40 — the specific mechanics can get complex depending on how and when commissions are earned and attributed, so DOL guidance or a payroll specialist should be consulted for a precise calculation in a specific case.
Frequently Asked Questions
Are commission-based employees entitled to overtime?
If non-exempt, yes — commission is a pay structure, not an automatic exemption from overtime.
How does commission factor into the overtime calculation?
Commissions earned during the relevant period are generally factored into the regular rate used for the overtime premium, similar to non-discretionary bonuses.
Does being paid by commission make someone exempt?
No — exemption still depends on the same duties and salary-level tests that apply to any other employee.
Is this calculation straightforward?
It can get complex depending on how commissions are earned and attributed — consulting DOL guidance or a payroll specialist is advisable for a precise calculation.