My apologies if this has been asked in advance.

My company pays sales staff a base hourly wage plus commission for sales made. We presently calculate overtime based on the hourly wage alone, treating commission as a sort of bonus.

Is this legal, or should OT be based on some sort of average of the two?

Non-discretionary bonuses and commissions will affect OT.

Patty would be better at explaining how this works, particularly if commissions are being paid on a different frequency than regular pay.

It is illegal! To illustrate the proper way you should be paid, assume the following: You are paid $10.00/hour, straight-time pay. You worked 50 hours this week - 40 hrs straight time and 10 hrs overtime. You also earned $100 in commissions for your laboring efforts. How much should you be paid?

Step 1
Compute Regular Rate-of-Pay
50 Hrs x $10.00..........$ 500
Add: Commissions.......$ 100
Total........................$ 600
Total Hours Worked........ 50
Regular Rate-of-Pay......$ 12

----------------------------

Step 2
Compute Straight-Time Pay
Regular Rate-of-Pay.....$ 12
Straight Time Hours......x 40
Straight-Time Pay.......$480

Step 3
Compute Overtime Rate-of-Pay
OT Rate ($12 x 1.5).....$ 18
Overtime Hours........... x 10
Overtime Pay ............ $180

Total Pay.................. $560

Thanks guys. I need to have a chat with my boss, and it looks like he owes people some back pay!

But how should it be handled when comissions arrise from both normal and overtime hours? What happens when you work your 40 hours, but the deal falls though (no comission), but you get a new client that makes a huge purchase in overtime hours alone? Sounds odd to me. My wife working base (hourly) plus comission at Sears (several years ago), never had her overtime rate adjusted based on previously earned comission, of course she still could earn additional comission during overtime. And to confuse the issue, comissions from sales returned would be deducted (often on a later pay period), which I assume would adjust the overtime rate as well.

Does commission earned during overtime also increate the overtime rate?

-Tim

But how should it be handled when comissions arrise from both normal and overtime hours? What happens when you work your 40 hours, but the deal falls though (no comission), but you get a new client that makes a huge purchase in overtime hours alone? Sounds odd to me. My wife working base (hourly) plus comission at Sears (several years ago), never had her overtime rate adjusted based on previously earned comission, of course she still could earn additional comission during overtime. And to confuse the issue, comissions from sales returned would be deducted (often on a later pay period), which I assume would adjust the overtime rate as well.

Does commission earned during overtime also increate the overtime rate?

-Tim
Sure. Doesn't matter whether the commission was earned during regular hours or overtime hours.

My wife working base (hourly) plus comission at Sears (several years ago), never had her overtime rate adjusted based on previously earned comission, of course she still could earn additional comission during overtime. And to confuse the issue, comissions from sales returned would be deducted (often on a later pay period), which I assume would adjust the overtime rate as well.

Does commission earned during overtime also increate the overtime rate?

-Tim

Well, yes, commissions affect the average wage per hour, so, if the average rate goes up because of the commissions, so does the OT rate.

Chargebacks. My head will spin trying to figure those out.