Commission Pay Calculator

The regular rate is the number a commission changes

A commission is not a bonus sitting outside the paycheck arithmetic. The Department of Labor’s regulation on commission payments is blunt about it: commissions, “whether based on a percentage of total sales or of sales in excess of a specified amount, or on some other formula”, are “payments for hours worked and must be included in the regular rate”. The same paragraph adds that it makes no difference whether the commission is the only pay or sits on top of a salary or an hourly rate, and no difference how often it is computed or paid.

The mechanics are in the next section of the same part. Where the commission is paid week by week, it is “added to the employee’s other earnings for that workweek” and “the total is divided by the total number of hours worked in the workweek to obtain the employee’s regular hourly rate”. The employee is then owed “extra compensation at one-half of that rate for each hour worked in excess of the applicable maximum hours standard”.

That last line is the part a straight commission calculator leaves out. Price four overtime hours at the base alone — $600.00 over 44 hours is $13.64 an hour, and four hours at half of the unrounded rate come to $27.27, against $136.36 once the commission is in the rate. The commission added $2,400.00 of pay and $109.09 of premium on top of it.

The regulation’s own worked example is a four-week commission of $384.00. Divided over four weeks that is $96.00 a week, and the extra half-time owed in each week depends on the hours in that week:

A $384.00 commission over four weeks, at $96.00 a week

The four weeks add up to $16.72 of premium that a pay stub showing only $384.00 of commission would never reveal. The regulation prints the same four answers, and the short cut it offers is a coefficient: overtime hours divided by twice the total hours, applied to the weekly commission — 8 ÷ 96 = 0.0833, and 0.0833 × $96.00 = $8.00.

When the commission is paid monthly but the overtime is weekly

Most commission plans do not pay weekly, and the regulation covers that. Where the commission cannot be traced to particular weeks, the employer may assume it was earned evenly and allocate it. For a monthly computation period the instruction is to “multiply the commission payment by 12 and divide by 52”; for a semi-monthly one, “multiply the commission payment by 24 and divide by 52”; for a period of a specific number of weeks, divide by that number of weeks.

The same commission, allocated to a week, and the extra half-time in a 45-hour week

$1,200.00 a month and $600.00 twice a month are the same $14,400.00 a year, and both allocate to $276.92 a week. $1,200.00 every four weeks is $15,600.00 a year and allocates to $300.00, which is why the last two rows agree with each other and not with the first two. The 45-hour figure is the allocated amount divided by 45, halved, and multiplied by the 5 overtime hours.

The regulation prints a monthly example of its own: a $416.00 commission allocates to $96.00 a week, a 48-hour week raises the rate by $2.00, and half of that over 8 overtime hours is $8.00. Its second method, for periods where hours swing too much for an even weekly split, divides the commission by the hours worked in the whole period instead — $192.00 over 96 hours is $2.00 an hour, and 16 overtime hours in that period owe $16.00.

Two methods, two answers on the same facts, and the regulation allows either. That is worth knowing before comparing a commission check to arithmetic done by hand: if the numbers are close but not identical, the allocation method is the usual reason.

Section 7(i): the one place commission pay can skip the premium

There is a statutory exception, and it is narrower than it sounds. Section 7(i) of the Fair Labor Standards Act lets an employer skip the overtime premium for an employee of a retail or service establishment who is paid largely by commission, provided two conditions both hold. The regulation states them in full:

The first condition is arithmetic against the federal minimum wage, which the Department of Labor still lists at $7.25 an hour, effective July 24, 2009. One and a half times that is $10.88 an hour, so a regular rate above it clears the first condition. The second condition is a share of total pay over at least a month:

The 50% test on a month of pay

The first row is the one people get wrong: a base that is a third of the month is still enough to sink the exemption, and the overtime premium comes back. Whether an employer is a retail or service establishment is a separate question, defined in section 13(a)(2) as an establishment 75 per centum of whose annual dollar volume is not for resale and is recognised as retail. This page does not test that, and neither does any calculator.

A draw is an advance, not a commission

A draw is money paid before the commission is known. The two kinds differ in one place only: what happens when the commission comes in smaller than the draw. A recoverable draw leaves the shortfall to be worked off out of later commission. A non-recoverable draw does not, and the employer absorbs it.

The same $1,600.00 of commission, three ways

Rows one and two pay the same cash today; they differ only in the $400.00. Row three shows the ordinary case, where the commission clears the draw and the draw simply disappears into it. The tool on this page follows the same rule: the period pays the base plus whichever is larger, the commission or the draw.

What the wage law says about the mechanics is limited. The regulation on how wages may be paid requires that they be paid “finally and unconditionally” or “free and clear”, and treats a requirement that an employee hand part of the wage back as a failure to pay it. It gives tools of the trade as its example. Whether a particular draw plan is lawful is a question about that plan and about state law, and this page does not answer it.

A clawback lands in a later period

When a sale reverses — a refund, a cancellation, a customer who never pays — the commission on it usually reverses too, and the reversal arrives in a period that has nothing to do with the sale. The arithmetic is simple and the timing is not:

5% commission, with one $6,000.00 deal refunded in period two

Period three is the case that generates arguments. The commission is $200.00, the chargeback is $300.00, and there is nothing left to take it from. Some plans carry the $100.00 into the next period; some take it out of the base; some do neither. Which one applies is written in the plan, and the plan is the document to read before the paycheck arrives.

On the law, the Department of Labor is explicit about the limit of its own role: the FLSA “does not provide wage payment collection procedures for an employee’s usual or promised wages or commissions in excess of those required by the FLSA”, though some states do have laws under which such claims may be filed. In other words the federal floor covers minimum wage and the overtime premium, and the rest of a commission dispute is a contract question in state court. This page computes the arithmetic and stops there.

What the seven results do not say

The seven organic results for this phrase were opened and the words counted on 2026-10-30. All seven answered; none were blocked. Three terms were counted on each page as delivered, with scripts and styles stripped:

The single draw hit is a feature list on commission-calculator.com (“Supports Splits, Overrides, Draw, Quota”), not an explanation. The two regular-rate hits are a feature list on sequifi.com and a tax page on paycheckcity.com that names commissions among supplemental wages. The four clawback hits are all on gigradar.io, inside a compensation-plan design article, and none of them does the arithmetic. The three sections above are what none of the seven prints.

What this page does not do

• No real estate commission. This is commission on sales you make as an employee, where the rate applies to your own sales. A broker split, a co-broke, a referral fee and a listing-side percentage are a different calculation with a different vocabulary.
• No tax. Commission is a supplemental wage and payroll withholds it under one of two methods. Neither is here; the paycheck calculator with overtime covers both, and this page does not repeat them.
• No plan rules. Whether a clawback may be deducted from other wages, when a commission is earned, and whether a draw is recoverable are questions about the written plan and about state law. The federal minimum wage page is clear that the FLSA does not collect commissions above its own floor.
• No 7(i) test. The two conditions are printed above. Whether your employer is a retail or service establishment, and whether a representative period has been chosen properly, are not things this page can see.
• No state minimum wage. $7.25 is the federal figure. Many states set a higher one, and the 1.5× test moves with it.
• No employer cost. The employer’s share of payroll tax, and any draw written off, are not in these numbers.

Questions people actually ask

Related pages

General information only — not tax, legal or payroll advice. The regular-rate rules are quoted from 29 CFR 778.117, 778.118 and 778.120, the section 7(i) conditions from 29 CFR 779.411 and 779.412, and the free-and-clear rule from 29 CFR 531.35, all read on 2026-10-30. The federal minimum wage of $7.25 an hour is from the Department of Labor’s minimum wage page. No tax, no state law, no plan rules, and no real estate commission.