Commission-based wages
Workers paid on commission must always receive at least minimum wage for the work they do.
What is being paid on commission?
A worker paid on commission receives an amount based on a percentage of his or her sales. This amount can be added to base wages. In any case, the wages paid to the worker must be at least equivalent to the minimum wage.
Computing commission-based wages
Worker paid only on commission
Example
Philippe works 40 hours per week as a salesperson. He is paid only on commission.
At the end of the week, Philippe had made $250 in commissions.
In order for Phillippe to receive at least the minimum wage, he should be paid $644 per week.
40 hours x $16.10 = $644/week
Commissions earned by Phillippe at the end of the week= $250
This means that there is a shortfall of $394, which must be paid to ensure that Philippe receives at least the equivalent to minimum wage for the hours worked each week. This shortfall will be paid by the employer.
Worker paid on commission with base wages
Example
Paula works 35 hours per week as a salesperson. She is paid base wages and commissions. Her commissions are totaled once per month. Her base wages are $375 per week. At the end of the week, Paula had made $190 in commissions.
To be paid at least the equivalent of minimum wage, Paula would need to receive $563.50 per week: (35 hr. x $16.10 = $563.50).
In actual fact, she received:
Base wages: $375
Commissions earned at the end of the week: $190
Total: $375+ $190 = $565
Paula's pay for her hours worked will thus be above minimum wage.
Minimum wage amount: $563.50
What Paula was paid: $565
Worker paid on commission in the automotive sales industry
Example
Roger works 40 hours a week as a car salesman. He is paid by commission only. Sales fluctuate significantly from week to week in this industry. For this reason, the minimum wage is evaluated every 4 weeks.
At the end of the month, Roger made $1,000 in commission.
To earn at least the minimum wage, Roger would have to receive $630 per week, and therefore $2,520 per month:
40 hours x $16.10 = $644/week x 4 weeks = $2,576
Commission earned after 4 weeks = $1,000
Roger would need another $1,576 to receive at least the equivalent of minimum wage for the hours worked each week. This difference will be paid by the employer.