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Code of Federal Regulations Pertaining to ESA |
| Labor |
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| Wage and Hour Division, Department of Labor |
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| Overtime Compensation |
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| The Overtime Pay Requirements |
29 CFR 778.120 - Deferred commission payments not identifiable as earned in particular
- Section Number: 778.120
- Section Name: Deferred commission payments not identifiable as earned in particular
workweeks. If it is not possible or practicable to allocate the
commission among the workweeks of the period in proportion to the amount
of commission actually earned or reasonably presumed to be earned
each week, some other reasonable and equitable method must be adopted.
The following methods may be
used: (a) Allocation of equal amounts to each week. Assume that
the employee earned an equal amount of commission in each week of
the commission computation period and compute any additional
overtime compensation due on this amount. This may be done as
follows: (1) For a commission computation period of 1 month, multiply
the commission payment by 12 and divide by 52 to get the amount
of commission allocable to a single week. If there is a
semimonthly computation period, multiply the commission payment by 24 and divide
by 52 to get each week's commission. For a commission computation period
of a specific number of workweeks, such as every 4 weeks (as
distinguished from every month) divide the total amount of commission by the number
of weeks for which it represents additional compensation to get the
amount of commission allocable to each
week. (2) Once the amount of commission allocable to a workweek has
been ascertained for each week in which overtime was worked, the
commission for that week is divided by the total number of hours worked in
that week, to get the increase in the hourly rate. Additional overtime due
is computed by multiplying one-half of this figure by the number
of overtime hours worked in the week. A shorter method of obtaining
the amount of additional overtime compensation due is to multiply the
amount of commission allocable to the week by the decimal equivalent of
the
fraction Overtime
hours
----------------. Total hours x
2 A coefficient table (WH-134) has been prepared which contains
the appropriate decimals for computing the extra half-time
due.
Examples: (i) If there is a monthly commission payment of $416, the amount
of commission allocable to a single week is
$96 ($416 x12=$4,992/52= $96). In a week in which an employee who
is due overtime compensation after 40 hours works 48 hours, dividing $96
by 48 gives the increase to the regular rate of $2. Multiplying one-half
of this figure by 8 overtime hours gives the additional overtime pay due
of $8. The $96 may also be multiplied by 0.083 (the appropriate
decimal shown on the coefficient table) to get the additional overtime pay
due of
$8. (ii) An employee received $384 in commissions for a 4-week
period. Dividing this by 4 gives him a weekly increase of $96. Assume that he
is due overtime compensation after 40 hours and that in the 4-week
period he worked 44, 40, 44 and 48 hours. He would be due
additional compensation of $4.36 for the first and third
week($96/44=$2.18/2=$1.09 x 4 overtime hours=$4.36), no extra
compensation for the second week during which no overtime hours were
worked, and $8 for the fourth week, computed in the same manner as weeks
one and three. The additional overtime pay due may also be computed by
multiplying the amount of the weekly increase by the appropriate decimal
on the coefficient table, for each week in which overtime was worked.
(b) Allocation of equal amounts to each hour worked. Sometimes,
there are facts which make it inappropriate to assume equal commission
earnings for each workweek. For example, the number of hours worked each
week may vary significantly. In such cases, rather than following the
method outlined in paragraph (a) of this section, it is reasonable to
assume that the employee earned an equal amount of commission in each
hour that he worked during the commission computation period. The amount
of the commission payment should be divided by the number of hours
worked in the period in order to determine the amount of the increase in
the regular rate allocable to the commission payment. One-half of this
figure should be multiplied by the number of statutory overtime hours
worked by the employee in the overtime workweeks of the commission
computation period, to get the amount of additional overtime
compensation due for this period.
Example: An employee received commissions of $192 for a commission
computation period of 96 hours, including 16 overtime hours (i.e., two
workweeks of 48 hours each). Dividing the $192 by 96 gives a $2 increase
in the hourly rate. If the employee is entitled to overtime after 40
hours in a workweek, he is due an additional $16 for the commission
computation period, representing an additional $1 for each of the 16
overtime hours.
[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7310, Jan. 23, 1981]
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