Commissions are treated the same as any other earnings for hours worked: whether a commission is figured as “a percentage of total sales or of sales in excess of a specified amount, or on some other formula,” the payment generally must be folded into the employee's regular rate — the same regular rate introduced in Chapter 1 as the base for the overtime premium. That is true whether the commission is the employee's only compensation or is paid on top of a guaranteed salary or hourly rate, and it does not matter how the employer computes, allocates, or pays it. A commission computed daily is covered exactly as one totaled up and paid weekly, biweekly, semimonthly, or monthly. When a commission cannot be calculated and paid until sometime after the employee's regular payday, the employer may, in the interim, pay overtime at one and one-half times the hourly rate alone, exclusive of the commission — but once the commission amount is known, it must be apportioned back over the workweeks of the period in which it was earned, with additional overtime paid for each workweek in that period in which the employee worked overtime, under § 778.119. Where apportioning the commission workweek by workweek is not practicable, a reasonable and equitable method may be used instead, such as assuming the commission was earned in equal amounts each week or each hour worked in the period, under § 778.120.

When the commission itself is paid on a workweek basis, the regulation spells out the arithmetic. The commission earned for the week is added to the employee's other earnings for that same workweek — apart from overtime premiums and the other payments excluded under section 7(e) of the Act, a list that includes, among other items, discretionary bonuses, gifts, and employer contributions to bona fide benefit plans (plans providing benefits such as retirement, life, accident, or health insurance). The total is then divided by the total hours the employee actually worked that week. The result is the regular hourly rate for that particular workweek, and the employee is then owed extra pay at one-half of that rate for every hour worked beyond the applicable maximum hours standard — ordinarily the 40-hour workweek set by section 7(a), though other federal or state law may impose a stricter limit that the Act does not override. Because the rate is recalculated week by week, a workweek with a larger commission produces a higher regular rate, and therefore a richer overtime premium, than a slower week — consistent with the workweek standing alone as the unit of calculation, as covered in Chapter 1.

Employees paid wholly or partly on commission are not limited to that week-by-week recalculation. The regulations also permit overtime for these employees to be computed on an established basic rate — a rate authorized under section 7(g)(3) of the Act as a substitute for the week-by-week recalculation, subject to its own regulatory conditions that this chapter does not cover further.