A $15-an-hour inside sales rep works 45 hours and earns $225 in commissions. Their take-home should be $950, not $900. The extra $50 comes from a rule most payroll systems botch: commissions raise your overtime rate.
The Fair Labor Standards Act requires that your overtime multiplier applies to a regular rate, not your base hourly wage. Non-discretionary bonuses, piece-rate earnings, and commissions all push that rate higher. Skip this step and you leave money on the table.
Who actually gets overtime
The inside/outside split
Most commission earners are non-exempt. That means time and a half for every hour past 40 in a workweek. Paid entirely by commission? Doesn’t matter. The FLSA protects all non-exempt employees regardless of pay structure.
One exemption swallows the rule whole.
Outside sales: no overtime, no salary floor
To lose overtime as an outside sales employee you must meet two tests:
- Your primary duty is making sales or obtaining orders.
- You regularly work away from your employer’s place of business.
On the road, at customer sites, off-site. If you sell from a desk, a phone, or a showroom you are inside sales. Inside sales is non-exempt. Period.
The salary threshold does not apply here. Outside sales is one of the few exemptions with no minimum salary. An outside rep earning $30,000 is exempt. An inside rep earning six figures is still non-exempt unless they qualify under a different exemption such as administrative or executive.
State daily triggers
Federal law cares only about the 40-hour week. Several states add daily thresholds. California, Alaska, and Nevada all require 1.5x after 8 hours in a day for covered employees. Colorado triggers at 12 hours. If you work in one of those states, a single long Tuesday can generate overtime even if your weekly total stays under 40.
Check your state labor department’s current threshold. The rules shift. Nevada’s 2024 ballot measure changed daily overtime for certain workers; confirm your status with the Nevada Labor Commissioner.
Build your regular rate
The formula
Total earnings divided by total hours worked. That’s it.
Regular Rate = (Base Pay + Commissions + Non-Discretionary Bonuses) ÷ Total Hours
Overtime is 1.5x that rate for every hour over 40. Commissions do not sit beside the calculation. They sit inside it, lifting the multiplier.
Worked example with a commission
$15 hourly base. 45 hours worked. $225 in commissions.
- Total earnings: $675 base + $225 commissions = $900
- Regular rate: $900 ÷ 45 hours = $20.00
- Overtime premium: 0.5 × $20.00 = $10.00 per overtime hour
- Overtime hours: 5
- Overtime pay: 5 × $10.00 = $50.00
- Total pay: $900 + $50.00 = $950.00
Without the commission, overtime would be 5 × $22.50 = $112.50 added to $600 in base earnings, for $712.50. The commission adds $237.50 total: $225 in base earnings plus $12.50 in extra overtime premium.
What the FLSA worked examples show
The US Department of Labor publishes arithmetic examples using time and a half over 40 hours. At $15 an hour with no commissions:
- 40 hours: $600.00 in base earnings, $0.00 overtime, $600.00 total
- 45 hours: $600.00 in base earnings, $112.50 overtime, $712.50 total
- 50 hours: $600.00 in base earnings, $225.00 overtime, $825.00 total
- 60 hours: $600.00 in base earnings, $450.00 overtime, $1,050.00 total
At $20 an hour:
- 40 hours: $800.00 in base earnings, $0.00 overtime, $800.00 total
- 45 hours: $800.00 in base earnings, $150.00 overtime, $950.00 total
- 50 hours: $800.00 in base earnings, $300.00 overtime, $1,100.00 total
- 60 hours: $800.00 in base earnings, $600.00 overtime, $1,400.00 total
At $25 an hour:
- 40 hours: $1,000.00 in base earnings, $0.00 overtime, $1,000.00 total
- 45 hours: $1,000.00 in base earnings, $187.50 overtime, $1,187.50 total
- 50 hours: $1,000.00 in base earnings, $375.00 overtime, $1,375.00 total
- 60 hours: $1,000.00 in base earnings, $750.00 overtime, $1,750.00 total
At $35 an hour:
- 40 hours: $1,400.00 in base earnings, $0.00 overtime, $1,400.00 total
- 45 hours: $1,400.00 in base earnings, $262.50 overtime, $1,662.50 total
- 50 hours: $1,400.00 in base earnings, $525.00 overtime, $1,925.00 total
- 60 hours: $1,400.00 in base earnings, $1,050.00 overtime, $2,450.00 total
These are base-rate-only figures from DOL arithmetic. Add commissions and the regular rate rises, pulling the overtime premium up with it. The math works the same way: total all earnings, divide by hours, multiply the excess hours by half that rate, and add the result to base pay.
Commission-only pay
No base salary. Just sales incentives.
The calculation is identical. Earn $1,200 in sales incentives over 50 hours. Regular rate: $1,200 ÷ 50 = $24.00. Overtime premium: 0.5 × $24.00 = $12.00 per hour. Ten overtime hours add $120.00. Total pay: $1,320.00.
One quirk: the longer you work for the same commission total, the lower your regular rate and the smaller the per-hour premium. The FLSA does not care. You still get the premium. No employer can dodge overtime by calling you “paid by results.”
Draws and guaranteed minimums
Draw against commission
A draw is an advance on future earnings, not a loan. It counts toward your regular rate the same as any other commission payment.
If your draw exceeds earned commissions you owe the difference back. That debt does not reduce the overtime owed. The employer calculates the premium on the full regular rate including the draw, then settles the draw balance separately. Recouping the draw from overtime pay violates the FLSA.
Guaranteed minimum
A guaranteed draw you keep regardless of whether you earn it out is even clearer. It is wages. It goes into the regular rate. Overtime sits on top.
One error to flag
Employers sometimes classify draws as loans. A genuine loan is voluntary, documented, and repaid with interest. A draw is none of those. If your pay stub calls it a loan but you did not sign a loan agreement, treat it as wages and include it in your regular rate calculation.
Skip these mistakes
Paying overtime on base rate only. The most common violation. Commissions must be folded into the regular rate before calculating the overtime premium.
Assuming outside sales status. Selling by phone or from a desk is inside sales. The exemption requires physical absence from the employer’s place of business as a regular part of the job.
Ignoring state daily overtime. Federal law sets the floor. California, Alaska, Nevada, and Colorado all impose daily triggers that can generate overtime even in a short week. Confirm your state’s current threshold with its labor department.
Treating draws as loans. If you did not sign a loan agreement and there is no interest, it is a draw. Include it in your regular rate.
Believing salaried means exempt. Only exempt salaried employees lose overtime. Non-exempt salaried employees get overtime calculated on their regular rate, commissions included.
What to do right now
Pull your last pay stub and a time record for the same workweek. Total your gross earnings including commissions and non-discretionary bonuses. Divide by hours worked. Multiply hours over 40 by half that rate. Add the result to your gross. If the number on your stub is lower, go to the US Department of Labor Wage and Hour Division website and look up how to file a complaint or request back wages.
Keep your own time log. Employer records can be wrong. Your contemporaneous notes carry weight in a wage claim.
If you work in a state with daily overtime, run the same check on any day exceeding 8 hours (or 12 in Colorado). The state labor department, not the federal DOL, enforces those rules.
When the math does not match, do not wait. FLSA claims have a statute of limitations. The clock runs from the date the wages were due.