Commissioned Employees Get Overtime, Too
Posted on 09-Nov-07 by The Timekeeper
Recently, the DOL came a-knockin’ at the door of Allied Home Mortgage Corp. in Houston, TX. After an investigation, the company reportedly paid $1,855,518 in back wages when the DOL determined 588 branch managers, loan officers, loan processors and clerks had not been properly compensated for overtime worked.
So what happened? Well, at least some of the employees included in the investigation were commission-only employees. Turns out, even if somebody is paid totally on commission, as long as they’re an employee and their position doesn’t meet the standards for exemption from overtime, you still have to pay them “time-and-a-half” when they work more than 40 hours a week. Same thing if they’re paid for piecework or any other basis — you still have to pay time-and-a-half for work over 40 hours a week.
But how do you calculate “time-and-a-half” for an employee who isn’t paid by the hour? According to the DOL, “Earnings may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment… in any workweek by the total number of hours actually worked.” (Reference: DOL Fact Sheet #23)
Do you have any employees who are paid for piecework or paid on commission? Are you tracking their time? Are they paid overtime when they work more than 40 hours a week? If not, you might want to review your practices with a qualified professional advisor before the DOL comes a-knockin’ at your door, too.
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