| Commissions, Piece Rate & Bonuses | in Spanish | |
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Commission?
A commission is a form of payment that is usually a percent of the business’ profit. For example, in a retail store the worker might receive 10 percent of each sale made or may be paid an hourly rate plus 5 percent commission for every sale made.
Piece Rate?
Piece rate payment is usually a price paid per unit of work. For example, in a manufacturing plant, workers are paid 10 cents per widget they make on the production line. The worker is entitled to minimum wage, however. So if the pay per piece does not equal minimum wage for the time it took to create those pieces, the business must make up the difference so the worker gets at least minimum wage for the time worked.
Bonuses?
Bonus payments are in addition to hourly, salary, commission, or piece rate payments. A bonus is normally given by a business to workers for excellent
work or for outstanding production. For example, workers in a manufacturing
plant were given a $300 bonus at the end of the year because they
made few errors on the production line, and the business made a lot
more money than it had expected to make. It is typically a reward
for good work but there is no agreement between the employer and workers that they will receive a bonus. This type of bonus is not considered to be part of the worker’s wages and is not required to be included in the overtime calculation.
Certain bonus payments are paid under an agreement between the employer and workers. These bonuses are typically paid to the workers every pay day, every quarter, semi-yearly, or yearly, or if the workers have an agreement for bonus payments or if the business led them to believe they would receive a bonus. These types of bonus payments are considered part of the worker’s wages. These bonus payments must be included in the overtime calculation.
May workers be
paid by commission or piece rate only, and must those payments equal minimum
wage for the hours worked in each pay period?
Yes. In general commissions and piece rate must equal minimum wage for the hours worked. However, there is an exception for those who sell products or services away from the employer's place of business and are paid commission. This is commonly known as "outside sales."
Is overtime pay
required for those paid on a commission or piece rate basis?
Yes. In general commissions and piece rate must be included in the overtime calculation for the hours worked in each workweek. There is an exception for those who sell products or services away from the employer's place of business and are paid commission. This is commonly known as "outside sales." For more information on how these calculations must be made, contact the nearest L&I office.
If a commission
or piece rate has not been paid as agreed between the worker and business,
what can the worker do?
If a worker is owed commission or piece rate wages and the employer refuses to pay, the worker may be able to:
For more detail, see these L&I Admininistrative Policies:
Commissions
and Minimum Wage (ES.C.3) (11 KB PDF)
How
to Calculate Overtime (ES.A.8.2) (57 KB PDF)
