[Code of Federal Regulations]
[Title 29, Volume 3]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR778.120]

[Page 411-412]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 778_OVERTIME COMPENSATION--Table of Contents
 
                 Subpart B_The Overtime Pay Requirements
 
Sec. 778.120  Deferred commission payments not identifiable as earned 
in particular workweeks.

    If it is not possible or practicable to allocate the commission 
among the workweeks of the period in proportion to the amount of 
commission actually earned or reasonably presumed to be earned each 
week, some other reasonable and equitable method must be adopted. The 
following methods may be used:
    (a) Allocation of equal amounts to each week. Assume that the 
employee

[[Page 412]]

earned an equal amount of commission in each week of the commission 
computation period and compute any additional overtime compensation due 
on this amount. This may be done as follows:
    (1) For a commission computation period of 1 month, multiply the 
commission payment by 12 and divide by 52 to get the amount of 
commission allocable to a single week. If there is a semimonthly 
computation period, multiply the commission payment by 24 and divide by 
52 to get each week's commission. For a commission computation period of 
a specific number of workweeks, such as every 4 weeks (as distinguished 
from every month) divide the total amount of commission by the number of 
weeks for which it represents additional compensation to get the amount 
of commission allocable to each week.
    (2) Once the amount of commission allocable to a workweek has been 
ascertained for each week in which overtime was worked, the commission 
for that week is divided by the total number of hours worked in that 
week, to get the increase in the hourly rate. Additional overtime due is 
computed by multiplying one-half of this figure by the number of 
overtime hours worked in the week. A shorter method of obtaining the 
amount of additional overtime compensation due is to multiply the amount 
of commission allocable to the week by the decimal equivalent of the 
fraction

 Overtime hours

 ----------------.

 Total hours x 2


A coefficient table (WH-134) has been prepared which contains the 
appropriate decimals for computing the extra half-time due.

    Examples: (i) If there is a monthly commission payment of $416, the 
amount of commission allocable to a single week is $96 ($416x12=$4,992/
52=$96). In a week in which an employee who is due overtime compensation 
after 40 hours works 48 hours, dividing $96 by 48 gives the increase to 
the regular rate of $2. Multiplying one-half of this figure by 8 
overtime hours gives the additional overtime pay due of $8. The $96 may 
also be multiplied by 0.083 (the appropriate decimal shown on the 
coefficient table) to get the additional overtime pay due of $8.
    (ii) An employee received $384 in commissions for a 4-week period. 
Dividing this by 4 gives him a weekly increase of $96. Assume that he is 
due overtime compensation after 40 hours and that in the 4-week period 
he worked 44, 40, 44 and 48 hours. He would be due additional 
compensation of $4.36 for the first and third week ($96/44=$2.18/
2=$1.09x4 overtime hours=$4.36), no extra compensation for the second 
week during which no overtime hours were worked, and $8 for the fourth 
week, computed in the same manner as weeks one and three. The additional 
overtime pay due may also be computed by multiplying the amount of the 
weekly increase by the appropriate decimal on the coefficient table, for 
each week in which overtime was worked.

    (b) Allocation of equal amounts to each hour worked. Sometimes, 
there are facts which make it inappropriate to assume equal commission 
earnings for each workweek. For example, the number of hours worked each 
week may vary significantly. In such cases, rather than following the 
method outlined in paragraph (a) of this section, it is reasonable to 
assume that the employee earned an equal amount of commission in each 
hour that he worked during the commission computation period. The amount 
of the commission payment should be divided by the number of hours 
worked in the period in order to determine the amount of the increase in 
the regular rate allocable to the commission payment. One-half of this 
figure should be multiplied by the number of statutory overtime hours 
worked by the employee in the overtime workweeks of the commission 
computation period, to get the amount of additional overtime 
compensation due for this period.

    Example: An employee received commissions of $192 for a commission 
computation period of 96 hours, including 16 overtime hours (i.e., two 
workweeks of 48 hours each). Dividing the $192 by 96 gives a $2 increase 
in the hourly rate. If the employee is entitled to overtime after 40 
hours in a workweek, he is due an additional $16 for the commission 
computation period, representing an additional $1 for each of the 16 
overtime hours.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7310, Jan. 23, 1981]