A sales commission is a sum of money paid to an employee upon completion of a task, usually selling a certain amount of goods or services. Employers sometimes use sales commissions as incentives to increase worker productivity. A commission may be paid in addition to a salary or instead of a salary. The Fair Labor Standards Act (FLSA) does not require the payment of commissions.
A Fact Sheet regarding commissions is available from the Wage and Hour Division's Web site.
Laws & Regulations on This Topic
29 CFR §779.410 Statutory provision
29 CFR §779.411Employee of a "retail or service establishment"
29 CFR §779.412Compensation requirements for overtime pay exemption under section 7(i)
29 CFR §779.413Methods of compensation of retail store employees
29 CFR §779.414 Types of employment in which this overtime pay exemption may apply
29 CFR §779.415Computing employee's compensation for the representative period
29 CFR §779.416What compensation "represents commissions"
29 CFR §779.417The "representative period" for testing employee's compensation
29 CFR §779.418Grace period for computing portion of compensation representing commissions
29 CFR §779.419Dependence of the section 7(i) overtime pay exemption upon the level of the employee's "regular rate" of pay
29 CFR §779.420Recordkeeping requirements
29 CFR §779.421Basic rate for computing overtime compensation of nonexempt employees receiving commissions