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
Philippe works 40 hours per week as a salesperson. He is paid only on commission. The amount is calculated every 4 weeks.
At the end of the month, Philippe had made $1000 in commissions.
In order for Phillippe to receive at least the minimum wage, he should be paid $540 per week, which works out to $2160 per month:
40 hours x $13.50 = $540/week x 4 weeks = $2160
Commissions earned by Phillippe at the end of 4 weeks = $1000
This means that there is a shortfall of $1160, 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
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 $350 per week. At the end of the month, Paula had made $675 in commissions.
To be paid at least the equivalent of minimum wage, Paula would need to receive $472.50 per week: (35 hr. x $13.50 = $472.50).
In actual fact, she received:
Base wages: 4 weeks x $350 = $1400
Commissions earned at the end of 4 weeks: $675
Total: $1400 + $675 = $2075
$2075 ÷ 4 weeks = $518.75 per week
Paula's pay for her hours worked will thus be above minimum wage.
Minimum wage amount: $472.50
What Paula was paid: $518.75