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https://thefootballlovers.com/football-questions/what-is-triple-time-pay

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The employer might choose to pay a higher hourly rate for call-back hours worked, such as double time (double the hourly rate) or triple time (three times

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https://www.patriotsoftware.com/blog/payroll/who-qualifies-for-time-and-a-half/

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If you have nonexempt employees, you have to pay them overtime, or time and a half, for any hours worked over 40 during the workweek. Learn all about time and a half, who qualifies for overtime, and how to calculate it.

What does time and a half mean?

Again, when an employee works overtime hours, you must pay them time and a half their regular rate of pay. This may be called overtime, overtime rate of pay, or an overtime premium.

How much is time and a half? Time and a half pay is 50% more than an employee's regular rate of pay. For every hour of overtime an employee works, you must give them their regular rate of pay plus half of that. To calculate an employee's overtime rate of pay, multiply their regular rate by 1.5.

The Fair Labor Standards Act ( FLSA) regulates overtime. According to the FLSA, you must pay time and a half to employees who work more than 40 hours in a workweek.

But, not all employees receive overtime pay. An employee's ability to receive time and a half depends on whether they are exempt or nonexempt.

Exempt and nonexempt employees

So, how do you know if an employee is exempt vs. nonexempt? Based on FLSA guidelines, there are a few telltale signs to look out for. Exempt vs. nonexempt varies depending on the following factors:

1. If the employee is hourly or salaried

2. The salary amount the employee receives

3. The employee's job duties

FLSA rules apply to nonexempt employees. Exempt employees are exempt from the FLSA.

The main difference between nonexempt and exempt employees is that nonexempt employees can earn overtime pay and exempt employees cannot. Take a look at a breakdown of how they differ below.

Exempt employees

Employees are exempt from the FLSA if they:

Make at least $35,568 annually (or $684 per week),

Receive a salary, AND

Have job duties that are considered exempt

Exempt job duties include high-level responsibilities that directly affect the company's overall operations, such as executive, administrative, professional, or computer-based duties.

Additionally, if you pay an employee an annual salary of $107,432 or more, they are exempt if they have at least one executive, administrative, or professional job duty.

There is also a test for employees who work in outside sales. If an employee's primary duty is making sales, they are exempt. The employee must also regularly perform work away from your business. They do not have to meet salary exemption requirements to be exempt.

Nonexempt employees

On the flip side, nonexempt employees:

Do not make at least $35,568 annually

Do not have exempt job duties (e.g., administrative)

If you have nonexempt employees, you must pay them time and a half (1.5 times) for any hours worked over 40 a week.

There's a common misconception that paying an employee a salary means they're exempt from overtime wages. You can have salaried nonexempt employees who are eligible for overtime pay.

Your state may have stricter overtime laws than the FLSA. Check with your state to learn about the overtime laws you need to follow.

How to calculate time and a half

Again, pay nonexempt employees time and a half for any overtime hours they work.

A good chunk of nonexempt employees receive hourly wages instead of a salary. However, because nonexempt employees can be salaried, you must know how to calculate time and a half for both salaried and hourly employees.

Hourly employees

Let's say you have a nonexempt hourly employee who earns $12 per hour. During the last workweek, the employee worked 45 hours (40 regular hours + 5 overtime hours).

To calculate time and a half for the hourly employee, follow these steps:

1. Calculate the employee's regular earnings

2. Find the time and a half pay rate (1.5 x Regular Hourly Wage)

3. Multiply the overtime rate by the number of overtime hours

4. Add together the regular and overtime wages

To find the employee's regular earnings, multiply their regular pay rate ($12) by 40 hours.

$12 X 40 = $480 in regular wages

Next, calculate the employee's time and a half pay rate. Multiply 1.5 by the employee's regular rate of pay.

1.5 X $12 = $18 per hour of overtime

Multiply the overtime rate from above ($18) by the number of overtime hours the employee worked during the week.

$18 X 5 = $90 of overtime pay

Last but not least, add the employee's regular wages and overtime pay together to find the employee's total wages. You owe the employee $570 in total gross wages ($480 + $90).

If your employee has multiple pay rates for different jobs within your company, you must calculate weighted overtime for their wages.

Salaried employees

When it comes to calculating time and a half for salaried employees, there are two methods you can use. The method you use depends on if the employee receives a salary that covers a fixed number of hours or if they receive a salary that covers all worked hours (aka fluctuating workweek).

Salary with fixed hours

For a salaried employee with fixed hours, use these steps:

1. Calculate the employee's regular hourly rate

2. Calculate the employee's regular earnings

3. Find the time and a half pay rate (1.5 x Regular Hourly Wage)

4. Multiply the overtime rate by the number of overtime hours

5. Add together the regular and overtime wages

Say your salaried employee earns $1,000 per week. You expect the employee to work 34 hours this week, but they wind up working 45.

First things first, you need to find the employee's regular hourly rate. Divide the employee's salary by the number of hours you expected the employee to work (34 hours).

$1,000 / 34 hours = $29.41

Calculate the employee's regular wages using the rate from above. Multiply the hourly rate by 40 to get the employee's total regular wages.

$29.41 X 40 hours = $1,176.40

Next, find the employee's overtime rate by multiplying their regular hourly rate by 1.5.

$29.41 X 1.5 = $44.12

Multiply the employee's overtime hours by the overtime rate of $44.12.

$44.12 X 5 hours = $220.60

Finally, add together the salaried employee's regular and overtime wages to get their total gross pay for the period.

$1,176.40 + $220.60 = $1,397

Your employee's gross wages for the period are $1,397.

Salary with all hours worked

Calculate all hours worked the same way you would calculate fluctuating workweek overtime. Employees who work a fluctuating workweek work a different number of hours from week to week.

Say your employee earns $1,000 a week and their salary covers all hours worked, no matter how many hours they work. The employee worked 48 hours this week.

Calculate the employee's regular hourly rate by dividing the weekly salary by the total number of hours worked.

$1,000 / 48 hours = $20.83

Because you already accounted for the overtime hours once in the regular hourly rate, you must multiply the regular rate of pay by 0.5 instead of 1.5.

$20.83 X 0.5 = $10.42

Multiply your employee's overtime hours (8 hours) by their overtime hourly rate ($10.42).

$10.42 X 8 hours = $83.36

As usual, add together the employee's overtime and regular wages to get their total gross pay for the period.

$1,000 + $83.36 = $1,083.36

Your employee earned $1,083.36 in gross wages for the period.
Don't make calculating each employee's overtime wages a hassle. When you use Patriot Software's easy-to-use payroll software, we'll do the calculations for you. And, we guarantee accuracy. Give it a try for free today! This article was updated from its original publication date of November 23, 2014.
This is not intended as legal advice; for more information, please click here.

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What Is Time and a Half? | How to Calculate Time and a Half

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If you have nonexempt employees, you have to pay them overtime, or time and a half, for any hours worked over 40 during the workweek. Learn all about time and a half, who qualifies for overtime, and how to calculate it.

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Types of Overtime (time and a half, double time, and triple time) 

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Types of Overtime (time and a half, double time, and triple time) 

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Overtime:
when you pay your employees 1.5 times their normal rate

Double Time:
when you pay your employees twice their normal rate.

For instance, if an employee regularly earns $17, their overtime rate is $25.5 per hour, while their double time rate is $34 per hour.

Time and a half:
Time and a half pay is 50% more than an employee’s regular rate of pay. For every hour of overtime an employee works, you must give them their regular rate of pay plus half of that. To calculate an employee’s overtime rate of pay, multiply their regular rate by 1.5

Triple Time:
If a public holiday's overtime work hours do not surpass regular working hours, the rate is twice the worker's daily rate. If a public holiday's overtime work hours surpass regular working hours, the rate is three times the worker's daily rate.

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There's more to calculating overtime pay than simply understanding the Fair Labor Standards Act (FLSA), which states that nonexempt, covered employees must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. This federal law may sound basic, but once all variables are considered - pay basis (i.e., hourly, salary, piece-rate, commission), flexible schedules, and other forms of compensation (i.e., non-discretionary bonuses, shift pay) - overtime calculations become a bit more complicated.

To make matters even more complex, businesses must comply with not only the FLSA, but also the wage and hour laws in state and local jurisdictions. When these regulations differ, employers have to apply the overtime pay rate that is most favorable to the employee.

What is overtime pay?

Under the FLSA, overtime pay is additional compensation (i.e., premium pay) that employers must pay to nonexempt employees who work more than 40 hours in a workweek. As previously stated, the federal rate is time and one-half the regular rate of pay, however, states that have their own laws may require daily overtime payments or double time premium pay.

What is the FLSA regular rate of pay?

The regular rate of pay is an employee's average hourly rate. It's calculated by dividing the total pay for employment in any workweek (except statutory exclusions) by the total number of hours actually worked.

How does overtime work?

Except for certain states that require premium pay daily, overtime is calculated by the workweek. According to the FLSA, a workweek is a fixed and regularly recurring period of 168 hours or seven consecutive 24-hour periods. It may begin on any day of the week and at any hour of the day and is not impacted by an employee's pay frequency, e.g., bi-weekly, semi-monthly, monthly. Additionally, each workweek stands alone, which means that averaging hours worked over two or more workweeks is not permitted.

Consider, for example, a nonexempt employee who works eight hours on Monday, Tuesday and Wednesday, 10 hours on Thursday, and six hours on Friday. This worker would not meet the weekly overtime threshold of the FLSA, but could be eligible for two hours of overtime pay for the hours worked on Thursday, depending on applicable state labor law.

Employees exempt from overtime

Employees may be exempt from the FLSA and, thus, not entitled to overtime if they earn a salary that exceeds the FLSA minimum salary requirements and perform job duties that satisfy one of the established overtime-exempt roles. The most common exemptions include executive, administrative, professional, outside sales or computer-related jobs.

How to calculate overtime pay for hourly employees

Calculating overtime pay is usually easiest with hourly employees who have a single rate of pay and no additional compensation. Following FLSA rules, multiply the regular rate of pay by 1.5 and multiply the result by the total number of overtime hours worked.

Example:
A nonexempt, hourly employee earns $10 per hour and works 46 hours in a workweek. There is no additional compensation paid during the workweek and no applicable state law that imposes requirements in excess of FLSA. This worker's total pay due, including the overtime premium, can be calculated as follows:

$10 x 40 hours = $400 base pay

$10 x 1.5 = $15 overtime rate of pay

$15 x 6 overtime hours = $90 overtime pay

$400 + $90 = $490 total pay

Calculating overtime for multiple pay rates

Sometimes nonexempt employees who are normally paid a fixed hourly rate work certain hours, usually at undesirable times, which grants them additional hourly pay. This practice is known as a shift differential. In such cases, employers must use the blended rate or weighted average of all rates paid in order to calculate the overtime premium due for hours worked over 40 in the workweek. Note that the FLSA has an exception to this rule that allows employer to pay overtime via the "rate in effect." Most states, however, do not permit this method.

Example:
Over the course of a workweek, a nonexempt employee works 35 hours on the day shift at $12 per hour and another 10 hours on the overnight shift at $15 per hour in a state that follows the FLSA overtime rules. This employee's total pay due, including the overtime premium, for the workweek can be calculated as follows:

(35 hours x $12) + (10 hours x $15) = $570 base pay

$570 / 45 total hours = $12.67 regular rate of pay

$12.67 x 0.5 = $6.34 overtime premium rate

$6.34 x 5 overtime hours = $31.70 total overtime premium pay

$570 + $31.70 = $601.70 total pay due

Overtime pay calculation for nonexempt employees earning a salary

A salary is intended to cover straight-time pay for a predetermined number of hours worked during the workweek. Under federal law, to calculate a nonexempt employee's regular rate of pay, divide the weekly salary by the total number of hours worked.

Note that certain states have different methods for calculating the regular rate of pay for nonexempt employees who are paid on a salary basis. Employers must review and adhere to the applicable state law.

Example:
A nonexempt employee earns a salary of $1,200 for an expected 40 hours of work per week. One week, the individual puts in an extra two hours to meet a deadline. The employee's total pay due, including the overtime premium, for the workweek can be calculated as follows:

$1,200 / 40 hours = $30 regular rate of pay

$30 x 1.5 = $45 overtime premium rate of pay

$45 x 2 overtime hours = $90 overtime premium pay

$1,200 + $90 = $1,290 total pay due

Calculating overtime for a nonexempt employee that works a fluctuating workweek

As the previous example shows, calculating overtime for nonexempt employees with fixed workweeks is fairly basic, but what happens when the employee's hours regularly fluctuate? The FLSA permits employers to compensate these workers for overtime hours at one half of their regular rate of pay if the following criteria ¹ are met:

The employer and the employees agree that their salaries are payment for all the hours worked each workweek

The employees' hours change on a weekly basis

The employees receive their agreed-upon salaries even when they work less than their regularly scheduled hours

The employees' salaries are sufficient that the regular rate never falls below minimum wage

The employees receive at least half time pay for every overtime hour worked

Note that certain states do not permit the fluctuating workweek calculation method. Employers must review and adhere to the applicable state law.

Example:
A nonexempt employee earns a salary of $900 per week regardless of how many hours are worked. If this individual works 55 hours in a workweek, the employee's total pay due, including the overtime premium, can be calculated as follows:

$900 / 55 hours = $16.36 regular rate of pay

$16.36 x 0.5 = $8.18 overtime premium rate

15 overtime hours x $8.18 = $122.70 overtime premium pay

$900 + $122.70 = $1,022.70 total pay due

Calculating overtime pay for non-hourly compensation

Overtime isn't strictly based on an hourly or salary basis of pay. Certain types of other compensation, such as the following, must be included in overtime calculations.

Piece-rate work

It's not uncommon for employers in manufacturing and certain other industries to pay their employees by the number of pieces they complete. For instance, an assembly line worker in a toy factory may be paid $2 per toy. Under normal circumstances, the employers simply pay the piece rate, but when overtime is worked, they generally must take these additional steps:

Divide the piece rate earnings by the number of hours worked to get the regular rate of pay

Multiply the regular rate of pay by 0.5 to get the overtime premium rate

Multiply the overtime premium rate by the number of overtime hours worked

Add the overtime premium pay to the piece rate pay to get the employee's total pay

Note that certain states may have different methods of calculating overtime for piece-rate workers. Employers must review and adhere to the applicable state law.

Non-discretionary bonuses and commission payments

Under the FLSA, any non-discretionary bonuses or commission earned by a nonexempt employee must be factored into their regular rate of pay. The calculation method varies depending on if the bonus or commission payment is allocated by the workweek or some other frequency, e.g., monthly, quarterly, annually.

Note that certain states have their own methods for calculating the regular rate of pay for nonexempt employees who are paid a flat sum bonus. Employers must review and adhere to the applicable state law.

Overtime rules and regulations

Recall that the FLSA overtime calculation factor is 1.5 times the regular rate of pay for nonexempt employees who work more than 40 hours per workweek. Overtime requirements, however, vary in certain states. In California, for instance, nonexempt employees who work in excess of a certain number of hours in one workday are entitled to overtime at 1.5 times their regular rate of pay or two times their regular rate of pay, i.e., double time. Employers can reduce their risk by adhering to each state's overtime requirements.

Keeping proper records for overtime pay

Overtime payments made to nonexempt employees are a type of payroll record and, thus, must be retained for at least three years in accordance with the FLSA. Additionally, the timesheets or other documents that show how the wages were calculated have to be saved for at least two years. Some states have their own payroll recordkeeping requirements, which may span longer time periods than those required by the FLSA.

Frequently asked questions about overtime pay

How do you calculate overtime per day?

In states that calculate overtime per workday, employers must apply the applicable overtime rate to each hour beyond what's considered a regular workday, e.g., eight hours.

Is overtime calculated by day or week?

Federal overtime laws are based on a 40-hour workweek, but some states calculate overtime by the workday. Employers must adhere to the state-specific requirements.

What is the formula to calculate overtime pay?

According to the FLSA, the formula for calculating overtime pay is the nonexempt employee's regular rate of pay x 1.5 x overtime hours worked. This calculation may differ in states that have requirements, such as double time, which are more favorable to the employee.
This guide is intended to be used as a starting point in analyzing overtime pay and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
¹ Department of Labor

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Calculating overtime pay can sometimes be complex. Learn how to do it correctly and help reduce your risk.

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https://www.sage.com/en-us/blog/glossary/what-is-overtime/

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Overtime definition | What is it? & How is it calculated? | Sage Advice US

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Overtime definition: Overtime refers to any hours worked that exceed normally scheduled working hours. Learn how to calculate it.

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Overtime refers to any hours worked by an employee that exceed their normally scheduled working hours.

The formula for calculating overtime pay is:
employee's regular rate of pay x 1.5 x overtime hours worked

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https://www.bamboohr.com/resources/hr-glossary/workweek#:~:text=Workweek%20Overview,any%20day%20of%20the%20week.

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Workweek Overview

A workweek is any seven, consecutive 24-hour periods established by an employer, for a total of 168 hours in a workweek.

The workweek may start on any day of the week. For example, some employers may choose to start their company's workweek on Monday and end on Sunday, while others will start on Thursday and end on Wednesday.

On an individual basis, a workweek may refer to the number of hours an employee works during those seven consecutive 24-hour periods. For example, most full-time wage workers work 40 out of the 168 hours.

For hourly workers, any additional time worked beyond 40 hours during a workweek is categorized in payroll as overtime pay and paid at an increased rate.

Meanwhile, salaried employees, also known as "exempt" employees, have no limit to the number of hours they can work during a workweek, receiving a fixed salary no matter how many hours they work.

How Long Is a Workweek?

A workweek is 168 hours long and must not exceed this limit.

For individual employees, a workweek is as long as they are scheduled to work during that period. For part-time employees, their hour count could vary drastically but must be below 40 hours a week to still be considered part-time. In the case of full-time employees, a standard workweek is set by U.S. law at 40 hours.

How Is a Workweek Defined Under FLSA?

According to the Fair Labor Standards Act (FLSA), a workweek is defined as a fixed, recurring period totaling 168 hours (seven 24-hour days).

Why Is a Workweek Important?

The workweek is an important distinction that forces employers to define overtime pay and remain compliant with the FLSA.

Overtime Pay

The workweek is the basis for determining the total overtime pay that is due to employees under the FLSA. Employers may not base overtime compensation on how many hours an employee works during a pay period (which often covers two weeks). If that were the case, employers would only offer pay for hours that exceed 80 during the two-week pay period.

Measuring working time by workweek, requires employers to pay their non-exempt employees an overtime rate for any hours after the first 40 of each workweek.

FLSA Compliance

Employers must adhere to this workweek definition in order to remain compliant with the FLSA. A noncompliance conviction may result in fines of up to 10,000 dollars, with a second conviction resulting in imprisonment for the guilty employer.

Can I Change My Company's Workweek?

You can change your business's workweek, but there must be a legitimate reason for doing so. For example, let's say your business was previously closed on Monday, and you used that as the start of your workweek. Then, you decide to remain open on Mondays and instead close on Saturdays. In that case, you would want to change the beginning of your workweek to Saturday.

A word of caution: changing the workweek too frequently may make it appear as though you're trying to avoid paying your employees overtime wages.

When Was the Workweek Invented?

The elements of the present-day workweek (40 hours generally spread over, five days each week) existed before the FLSA became official. While calls for the eight-hour workday date back to the mid-1800s, the first major company to adopt a standard 40-hour workweek was Ford Motors in 1926.

The defined workweek that the United States observes today was invented after the FLSA was enacted in 1938, which was created to support the health and well-being of factory workers. In the act, a 44-hour workweek was established as law but was later amended to 40 hours in 1940.

How Do I Choose When to Start My Workweek?

Employers should start their company's official workweek on a day when their employees don't work. It is much easier to calculate payroll when your employees are not actively gaining hours.

For example, say your business is open Tuesday through Sunday from 11 AM to 7 PM. While the workweek would technically start on Tuesday for your employees, having an official start on Monday will make it easier to differentiate overtime hours from regular hours.

Using Multiple Workweeks

But what if your business runs seven days a week? The best way to approach this is to create multiple workweeks that apply to different groups of employees.

For example, say your business has three different work schedules: Monday through Friday, Tuesday through Saturday, and Wednesday through Sunday. Each of those work schedule groups could have different workweeks, starting on Sunday, Monday, and Tuesday respectively. This would allow you to calculate overtime and regular pay on a day those employees do not work.

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A workweek is any 7 consecutive days or 168 consecutive hours. The workweek is the basis for determining the total overtime pay that is due employees under the FLSA.

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A workweek is any seven, consecutive 24-hour periods established by an employer, for a total of 168 hours in a workweek. The workweek may start on any day of the week.

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https://en.wikipedia.org/wiki/Wage#:~:text=A%20wage%20is%20payment%20made,as%20prizes%20and%20tip%20payouts.

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A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as minimum wage, prevailing wage, and yearly bonuses, and remunerative payments such as prizes and tip payouts. Wages are part of the expenses that are involved in running a business. It is an obligation to the employee regardless of the profitability of the company.

Payment by wage contrasts with salaried work, in which the employer pays an arranged amount at steady intervals (such as a week or month) regardless of hours worked, with commission which conditions pay on individual performance, and with compensation based on the performance of the company as a whole. Waged employees may also receive tips or gratuity paid directly by clients and employee benefits which are non-monetary forms of compensation. Since wage labour is the predominant form of work, the term "wage" sometimes refers to all forms (or all monetary forms) of employee compensation.

Wage labour involves the exchange of money for time spent at work. As Moses I. Finley lays out the issue in The Ancient Economy:

The very idea of wage-labour requires two difficult conceptual steps. First it requires the abstraction of a man's labour from both his person and the product of his work. When one purchases an object from an independent craftsman ... one has not bought his labour but the object, which he had produced in his own time and under his own conditions of work. But when one hires labour, one purchases an abstraction, labour-power, which the purchaser then uses at a time and under conditions which he, the purchaser, not the "owner" of the labour-power, determines (and for which he normally pays after he has consumed it). Second, the wage labour system requires the establishment of a method of measuring the labour one has purchased, for purposes of payment, commonly by introducing a second abstraction, namely labour-time.

The wage is the monetary measure corresponding to the standard units of working time (or to a standard amount of accomplished work, defined as a piece rate). The earliest such unit of time, still frequently used, is the day of work. The invention of clocks coincided with the elaborating of subdivisions of time for work, of which the hour became the most common, underlying the concept of an hourly wage.

Wages were paid in the Middle Kingdom of ancient Egypt, ancient Greece, and ancient Rome. Following the unification of the city-states in Assyria and Sumer by Sargon of Akkad into a single empire ruled from his home city circa 2334 BC, common Mesopotamian standards for length, area, volume, weight, and time used by artisan guilds were promulgated by Naram-Sin of Akkad (c. 2254-2218 BC), Sargon's grandson, including shekels. Codex Hammurabi Law 234 (c. 1755-1750 BC) stipulated a 2-shekel prevailing wage for each 60- gur (300- bushel) vessel constructed in an employment contract between a shipbuilder and a ship-owner. Law 275 stipulated a ferry rate of 3- gerah per day on a charterparty between a ship charterer and a shipmaster. Law 276 stipulated a 2-gerah per day freight rate on a contract of affreightment between a charterer and shipmaster, while Law 277 stipulated a -shekel per day freight rate for a 60-gur vessel.

Depending on the structure and traditions of different economies around the world, wage rates will be influenced by market forces ( supply and demand), labour organisation, legislation, and tradition. Market forces are perhaps more dominant in the United States, while tradition, social structure and seniority, perhaps play a greater role in Japan.[citation needed ]

Wage differences

Even in countries where market forces primarily set wage rates, studies show that there are still differences in remuneration for work based on sex and race. For example, according to the U.S. Bureau of Labor Statistics, in 2007 women of all races made approximately 80% of the median wage of their male counterparts. This is likely due to the supply and demand for women in the market because of family obligations. Similarly, white men made about 84% the wage of Asian men, and black men 64%. These are overall averages and are not adjusted for the type, amount, and quality of work done.

Seventy-five million workers earned hourly wages in the United States in 2012, making up 59% of employees. In the United States, wages for most workers are set by market forces, or else by collective bargaining, where a labor union negotiates on the workers' behalf. The Fair Labor Standards Act establishes a minimum wage at the federal level that all states must abide by, among other provisions. Fourteen states and a number of cities have set their own minimum wage rates that are higher than the federal level. For certain federal or state government contacts, employers must pay the so-called prevailing wage as determined according to the Davis-Bacon Act or its state equivalent. Activists have undertaken to promote the idea of a living wage rate which account for living expenses and other basic necessities, setting the living wage rate much higher than current minimum wage laws require. The minimum wage rate is there to protect the well being of the working class.

In the second quarter of 2022, the total U.S. labor costs grew up 5.2% year over year, the highest growth since the starting point of the serie in 2001.

For purposes of federal income tax withholding, 26 U.S.C. § 3401(a) defines the term "wages" specifically for chapter 24 of the Internal Revenue Code:

"For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an employee for his employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash;" In addition to requiring that the remuneration must be for "services performed by an employee for his employer," the definition goes on to list 23 exclusions that must also be applied.

Political science:

1. ^ Finley, Moses I. (1973). The ancient economy. Berkeley: University of California Press. p. 65. ISBN 9780520024366.

2. ^ Dohrn-van Rossum, Gerhard (1996). History of the hour: Clocks and modern temporal orders. Thomas Dunlap (trans.). Chicago: University of Chicago Press. ISBN 9780226155104.

3. ^ Ezzamel, Mahmoud (July 2004). "Work Organization in the Middle Kingdom, Ancient Egypt". Organization. 11 (4): 497-537. doi:10.1177/1350508404044060. ISSN 1350-5084. S2CID 143251928.

4. ^ Powell, Marvin A. (1995). "Metrology and Mathematics in Ancient Mesopotamia". In Sasson, Jack M. (ed.). Civilizations of the Ancient Near East. Vol. III. New York, NY: Charles Scribner's Sons. p. 1955. ISBN 0-684-19279-9.

5. ^ Hammurabi (1903). Translated by Sommer, Otto. "Code of Hammurabi, King of Babylon". Records of the Past. Washington, DC: Records of the Past Exploration Society. 2 (3): 85. 234. If a shipbuilder builds ... as a present [compensation].

6. ^ Hammurabi (1904). "Code of Hammurabi, King of Babylon" (PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd ed.). Chicago: University of Chicago Press. p. 83. §234. If a boatman build ... silver as his wage.

7. ^ Hammurabi (1903). Translated by Sommer, Otto. "Code of Hammurabi, King of Babylon". Records of the Past. Washington, DC: Records of the Past Exploration Society. 2 (3): 88. 275. If anyone hires a ... day as rent therefor.

8. ^ Hammurabi (1904). "Code of Hammurabi, King of Babylon" (PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd ed.). Chicago: University of Chicago Press. p. 95. §275. If a man hire ... its hire per day.

9. ^ "Student Login". Edgenuity. - Education 2020 Homeschool console, Vocabulary Assignment, definition entry for "wage rate" (may require login to view)

10. ^ Magnusson, Charlotta. "Why Is There A Gender Wage Gap According To Occupational Prestige?." Acta Sociologica (Sage Publications, Ltd.) 53.2 (2010): 99-117. Academic Search Complete. Web. 26 Feb. 2015.

11. U.S. Bureau of Labor Statistics. ^ "Earnings of Women and Men by Race and Ethnicity, 2007" Accessed June 29, 2012

12. "Employees" as a category excludes all those who are self-employed, and this statistics only considers workers over the age of 16. ^ U.S. Department of Labor. Bureau of Labor Statistics (2013-02-26), Characteristics of Minimum Wage Workers: 2012

13. ^ Tennant, Michael. "Minimum Wage The Ups & Downs." New American (08856540) 30.12 (2014): 10-16. Academic Search Complete. Web. 26 Feb. 2015.

14. ^ Aeppel, Timothy (August 29, 2022). "North American companies send in the robots, even as productivity slumps". Reuters.

Galbraith, James Kenneth. Created Unequal: the Crisis in American Pay, in series, Twentieth Century Fund Book[s]. New York: Free Press, 1998. ISBN 0-684-84988-7

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A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as minimum wage , prevailing wage , and yearly bonuses, and remunerative payments such as prizes and tip payouts.

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A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as minimum wage, prevailing wage, and yearly bonuses, and remunerative payments such as prizes and tip payouts.

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https://www.collinsdictionary.com/dictionary/english/commission#:~:text=Commission%20is%20a%20sum%20of,salespeople%20work%20on%20commission%20only.

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Commission is a sum of money paid to a salesperson for every sale that he or she makes. If a salesperson is paid on commission, the amount they receive depends on the amount they sell. The salespeople work on commission only.

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https://study.com/learn/lesson/what-is-commission.html#:~:text=Typically%2C%20companies%20pay%20out%20a,it%20to%20the%20commission%20earned.

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What is Commission? | Commission Formula, Examples & Calculation - Video & Lesson Transcript | Study.com

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What is a commission? Understand the commission definition with examples of how to calculate commission using a commission rate formula and examples.

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https://wagepoint.com/blog/how-commission-works-and-how-to-choose-the-right-payroll-structure/#:~:text=Gross%20commission%20pay%20calculation.,-The%20way%20to&text=Essentially%2C%20you%20take%20the%20commission,multiply%20it%20by%20the%20sale.&text=As%20an%20example%2C%20say%20an,that%20sale%20would%20be%20%242%2C000.

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In this Article:

You've probably heard the term "working on commission" and have a general sense of what it means, but what is commission pay really? Whether you're a business owner that's considering this pay structure or not, it's helpful to get to know what it is in case an employee asks about it. You may even decide it's the type of pay structure that'll work best for your business.

Within a commission pay structure, a company compensates its employees based on the revenue they generate for the business. By definition, it's a fee paid to an employee for transacting a piece of business or performing a service. In simpler terms, the employee gets a portion of the money from a sale they made for the business.

Commission structures are most common in sales heavy industries, such as retail, real estate, insurance and the stock market. You'll also find them used for teams of direct sales companies. Direct sales companies sell products or services directly to a customer, and there isn't a storefront.

With this different pay structure comes different tax treatments for commissions versus other income types. If you're running your own payroll, get to know and keep in mind the commission pay tax guidelines for your country, state, province and/or city. If you run payroll using online software, making sure it's able to handle and calculate commission pay will make things simpler during your pay runs.

For instance, Wagepoint calculates all of the applicable taxes on the gross commission totals you provide (using the periodic tax method). As an employer, all you need to do is input the gross commission amount, and we take care of the rest, including all year-end reporting.

Gross commission pay calculation.

The way to calculate gross commission pay is pretty straightforward. Essentially, you take the commission rate and multiply it by the sale.
sales amount x commission rate = gross commission
As an example, say an employee lands a $40,000 sale and their commission rate is 5%. The employee's gross commission for that sale would be $2,000.

Employers need to calculate a gross commission value for each employee depending on the different employment commission structures.

7 ways to calculate commission pay.

Keep those initial ideas of what commission pay is and how to calculate the gross amount in mind. Now, we'll outline seven different ways you can include commission in your pay structure.

1. Bonus Commission Pay

2. Straight Commission Pay (Commission Only)

3. Salary Plus Commission Pay

4. Variable Commission Pay

5. Graduated Commission Pay

6. Residual Commission Pay

7. Draw Against Commission Pay

1. Bonus Commission Pay

Bonus commissions are an opportunity to reward employees for their success. These bonuses are in addition to an employee's established pay and are usually based on pre-established earning quotas.

Bonus commission pay can be awarded to individuals, teams or even company-wide for extraordinary performances. Here's what a bonus commission might look like.

If the bonus commission was 5% of a huge $10,000 sale, the employee would receive a $500 bonus, minus all applicable taxes, in addition to their regular pay.
(sale amount x commission rate) + regular pay - taxes = employee's earnings
This type of sales commission structure is common within startup organizations that want to reward high achievers and give the team a boost in morale.

Remember that any bonuses paid to an employee, even as a cash gift, are considered taxable and should be included within their total yearly earnings.

2. Straight Commission Pay (Commission Only)

Straight commission pay can also be referred to as commission only because it's the only pay an employee earns from their work. There's no base salary or hourly wage included in this pay structure.

All compensation is based on an agreed-upon percentage of sales. Companies can benefit from a straight commission pay setup because they don't have to pay for anything unless an employee is generating business.

Say an employee brings in $50,000 of business in a month and their commission rate is 8%. They'd earn $4,000, minus all applicable taxes on their pay cheque.

(sales amount x commission rate) - taxes = employee's earnings

This type of commission is most common within the real estate and auto industries.

3. Salary Plus Commission Pay

A salary with commission is the most common type of commission pay structure. In this case, an employee has a fixed salary base, but they also get commissions for their sales or performance.

This structure offers a stable pay cheque while also encouraging the employee to do well and make sales to earn more. The fixed salary is steady, but generally smaller because a big portion of the employee income is still determined by sales.

If an employee brings in $50,000 of business in a month and their commission rate is 4%, they'd be paid $2,000, plus their salary, minus all applicable taxes.
(sales amount x commission rate) + salary - taxes = employee's earnings
This type of commission is most common within retail industries.

4. Variable Commission Pay

Variable commission pay simply means the commission pay is different based on the kind of sale.

With this setup, any easily made sales can be rewarded differently than harder-to-earn sales to encourage growth in specific markets. It can also be used to reward the sale of long-term contracts or highly desirable customers.

If an employee brings in $40,000 of regular business at a commission rate of 5% as well as $10,000 of highly desirable business at a commission rate of 15%, they'd earn $3,500, minus all applicable taxes.
((sales amount A x commission rate A) + (sales amount B x commission rate B)) - taxes = employee's earnings
This type of commission is most common for businesses trying to break into new markets because the setup encourages and rewards specific types of sales.

5. Graduated Commission Pay

A graduated commission pay focuses on performance. A company can set up various tiers, and an employee gets paid the commission amount for the level of sales they reached.

This could look like 5% of the first $20,000 of sales, 10% of the next $20,000 of sales and 15% of any sales made above the $40,000 mark.

The actual commission percentage will increase incrementally at a predetermined rate as an employee reaches higher levels of sales.

As an example, if an employee brings in $50,000 of business in a month and their commission rate is 5% on the first $20,000 and 8% on anything above that amount, they'd receive $3,400, minus all applicable taxes.
((tier 1 sales amount x tier 1 commissions rate) + (tier 2 sales amount x tier 2 commission rate)) - taxes = employee's earnings
This type of commission is most common for businesses that want to incentivize sales volume.

6. Residual Commission Pay

A residual commission pay structure is used when a company lands ongoing client accounts. With this setup, an employee will continue to receive commission on a sale as long as it continues to generate revenue. So instead of a one-time commission based on the initial sale, they'll continue to earn as long as that client continues to do business with the company.

Residual commission has both pros and cons for sales employees.

Employees can benefit from this type of commission pay because, after a time, they'll begin to build a steady commission income from their residual sales. On the flipside, losing a long-term sale can suddenly reduce an employee's earnings by a significant amount.

If an employee brings in $50,000 of monthly business and their commission rate is a residual 5%, they'd be paid $1,000, minus all applicable taxes. This $1,000 pay would continue every month so long as the sale continued to bring in $50,000 of revenue each month.
(sales amount x commission rate) - taxes = employee's earnings
This type of commission is most common for agencies, consulting firms and any businesses that prioritize long-term accounts.

7. Draw Against Commission Pay

With a draw against commission pay system, employees are advanced a predetermined amount that's deducted from their commission on each following pay. This gives the employee some income while they work toward their sales quotas and commission goals.

After the draw amount is paid out of the commissions on the following pay, the employee is left with the remainder. If an employee is unable to make the draw amount in commissions, they'll owe that amount back to the company.

Someone can take additional pay from the next set of commissions, but if an employee has a few bad sale cycles in a row, they can be left with significant debt.

If an employee brings in $50,000 of business in a month and their commission rate is 8%, they would be paid $4,000. The draw amount that they received in advance (example: $3,000) would be subtracted from the gross commission total, leaving an extra $1,000, minus all applicable taxes.
(sales amount x commission rate) - advanced amount - taxes = employee's earnings
This type of commission is most common for businesses with lengthy or seasonal sales cycles.

Choosing the best commission pay structure for your business.

The different types of commission pay setups can be combined to create the perfect structure for your business. For instance, a salary plus commission structure can be specialized by also including a graduated or variable system.

Now that you know what commission pay is, it's all about finding what works best for your business.

Further reading

Disclaimer: The advice we share on our blog is intended to be informational. It does not replace the expertise of accredited business professionals.
Updated: May 2023
Written by Jordan Nottrodt

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Get a breakdown of commission pay as well as seven commission pay structures to consider for your business.

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Video: https://youtu.be/sgm-Ru-DLWE

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Definition: https://www.indeed.com/career-advice/pay-salary/paid-by-commission#:~:text=What%20does%20it%20mean%20to,of%20the%20sale%20in%20income.

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Essentially, you take the commission rate and multiply it by the sale.
commission = total sales revenue * commission rate

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A commission is a payment that an employee makes based on a sale. Some employees earn commission in addition to their base income, while other employees work only on commission. When an employee earns a commission, they make a portion of the sale in income.