Learn how to set up and pay commission to an employee.
What is a commission?
Commission is a form of compensation that's typically based on an employee's sales performance or completion of a task. Commission can be paid in addition to a salary or instead of a salary. Hourly employees who also receive a commission must be paid at least the minimum wage for hourly workers.
For commission employees, federal and state law require the employee to get paid at least the minimum wage. If the employee's commission is low enough, they'll need to be paid the difference to meet the minimum wage limits.
As a state regulation, hours are still required to be entered for commission-only employees in:
- Rhode Island
To pay commission to your employees, follow the steps below:
Step 1: Set up commission as employee's salary or additional pay
You can either set an employee's pay to commission only or add commission as an additional pay type. Here's how:
Commission as employee's salary
Commission as additional pay
You can pay your employees a commission along with their regular pay. To do that, you need to add a commission pay type first. Here's how:
Step 2: Pay employees a commission
Pay commission only paycheck
How is a commission only paycheck different from a regular payroll with commission pay? To learn more, see Pay commission separate from regular pay.
Note: Split direct deposit or direct deposit to 2 accounts is not applicable for commission only paychecks.
To create a commission only paycheck, follow the steps below for your payroll service:
Pay commission along with the regular pay
On top of the employees' regular pay, you can also pay commission to them. Here's how you do it in your payroll service: