How to Calculate Overtime with Sales Commissions
Sales commissions must legally be included in your regular rate of pay when calculating overtime. Learn the FLSA rules and check our step-by-step example.
M. Imtinan Farooq
Data Engineer & Financial Analyst
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How to Calculate Overtime with Sales Commissions — quick answer
Sales commissions must legally be included in your regular rate of pay when calculating overtime. Learn the FLSA rules and check our step-by-step example.
For employees earning sales commissions, calculating overtime is one of the most misunderstood aspects of payroll. Many workers believe that commissions are separate from hourly wages and do not impact overtime pay.
Under the federal Fair Labor Standards Act (FLSA), this assumption is incorrect. The law requires that all non-excludable compensation—including sales commissions—be incorporated into the employee's Regular Rate of Pay (RROP) before calculating overtime premium rates.
If your employer calculates your overtime using only your base hourly wage, ignoring your commissions, you are likely being underpaid. Using a statutory RROP calculator or a specialized blended overtime rate calculator is the best way to determine the correct overtime wages owed.
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If your overtime includes bonuses, commissions, shift differentials, or multiple hourly rates, use the regular rate of pay calculator to estimate your RROP, overtime premium, and total gross pay.
Open RROP calculatorFLSA Rules: Commissions in the Regular Rate
The FLSA states that commissions (whether paid weekly, monthly, or quarterly) must be added to other straight-time earnings to determine the regular hourly rate.
This rule applies to all non-exempt employees earning commission, regardless of whether they work in retail, services, or other industries. The only major exception is for "outside sales employees" who meet specific exemption tests.
How to Calculate Overtime with Commissions
To calculate the overtime pay for a workweek in which commission is earned, follow these mathematical steps:
- Calculate Total Hourly Earnings: Multiply regular hours worked by the base wage rate.
- Add Commission: Add the weekly commission earned to the straight-time hourly earnings.
- Determine the Regular Rate of Pay (RROP): Divide the total earnings (wages + commission) by the total hours worked during the week.
- Calculate the Overtime Premium: Multiply the RROP by 0.5, and then multiply by the overtime hours worked (above 40).
Worked Example: The Inside Sales Representative
Let's look at a concrete example. Sarah is an inside sales rep earning a base rate of $15.00/hour. During a specific workweek, she works 48 hours (8 overtime hours) and earns a commission of $300.00.
Calculation Breakdown:
- Base Hourly Earnings: 48 hours × $15.00 = $720.00
- Total Weekly Earnings: $720.00 base pay + $300.00 commission = $1,020.00
- Regular Rate of Pay (RROP): $1,020.00 ÷ 48 hours = $21.25 per hour
- Overtime Premium Owed (0.5× RROP): $21.25 × 0.5 = $10.63 per hour
- Overtime Premium Payout: 8 overtime hours × $10.63 = $85.04
- Sarah's Total Weekly Gross Pay: $1,020.00 (straight-time + commission) + $85.04 (overtime premium) = $1,105.04
Underpayment risk: if Sarah's employer computed overtime without the commission, weekly pay could be $1,080.00 instead of $1,105.04. Sarah would lose $25.04 for that single week.
Verify Your Commission Pay Correctly
If you receive regular sales commissions, make sure your employer is including them in your blended overtime rate. Use our specialized tools to stay compliant:
FAQ
Frequently Asked Questions
Are commissions included in overtime?+
Sales commissions for non-exempt employees are generally included in the regular rate of pay before calculating overtime premiums.
What if commissions are paid monthly?+
Commissions paid less often than weekly usually need to be allocated back to the workweeks in which they were earned so the correct regular-rate overtime premium can be calculated.
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Rule last reviewed: July 7, 2026Page last updated: July 8, 2026Official sources
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Estimates only; not legal, tax, or payroll advice. Confirm final pay obligations with the official agency guidance or a qualified advisor.
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