FLSA · Deferred commissions · 29 CFR § 778.120
FLSA 778.120 deferred commissions — equal-week / equal-hour allocation
29 CFR § 778.120 (with §§ 778.117–778.119): when deferred commissions cannot be identified with particular workweeks, allocate equal amounts to each week (month ×12/52, semimonth ×24/52, or ÷N weeks) or equal amounts to each hour of the period; the weekly share is in the regular rate; extra half-time after 40. Classic $20 × five 10h + monthly $416 → weekly $96 → $1,205.60 vs /overtime/ $1,100 vs MA Sullivan $1,225 vs 7(i)-style no-extra $1,096 vs 778.310 $1,182.50 vs 778.218 $1,220. CFR (a)(2)(i) +$8; (b) +$16.
How 778.120 pays
Deferred, then allocated. Section 778.118 covers commissions paid on a workweek basis. When the commission covers a longer period and cannot be tied to particular weeks in proportion to earnings, § 778.120 requires a reasonable allocation — typically equal amounts to each week of the period, or equal amounts to each hour worked in the period.
In the regular rate. The weekly share is added to other earnings (except statutory exclusions) and divided by hours worked. Overtime is straight time already paid plus extra half-time at that regular rate for hours over 40 — not a second 1.5× on a rate that ignores the commission.
Not 7(i) / not MA Sullivan / not waiting-time. § 207(i) can wipe weekly-40 OT when retail/service gates are met. MA Sullivan excludes commissions from RR. This page assumes OT is due and brings the deferred commission into RR.
Classic · $20 × five 10h + monthly $416 → weekly $96 → $1,205.60 (RR $21.92; extra $109.60).
CFR (a)(2)(i) · $96 on 48h → additional commission OT $8 (full week @ $20 → $1,144).
CFR (b) · $192 / 96h with 16 OT → additional $16 for the period.
Zero commission · five 10h @ $20 → $1,100.
4-week $384 → $96/week · 44h @ $20 → commission half $4.36.
Sources
- 29 CFR § 778.120 — Deferred commission payments not identifiable as earned in particular workweeks (Cornell LII, HTTP 200)
- 29 CFR § 778.120 — eCFR (HTTP 200)
- 29 CFR § 778.120 — GovRegs (HTTP 200)
- 29 CFR § 778.120 — GovInfo CFR XML (HTTP 200)
- 29 CFR § 778.118 — Commission paid on a workweek basis (HTTP 200)
- 29 CFR § 778.119 — Deferred commissions identifiable with particular workweeks (HTTP 200)
- WHD Fact Sheet #23 — Overtime Pay (PDF, HTTP 200)
- /flsa-7i-commission/ — § 207(i) cousin
- /massachusetts-commission-overtime/ — MA Sullivan exclude cousin
- /overtime/ — ordinary after-40 baseline
FAQ
Classic five 10h @ $20 + monthly $416?
Weekly share $96; remuneration $1,096; RR $21.92; extra half-time $109.60; total $1,205.60.
Month vs equal-hour?
Month / semimonth / ÷N weeks put the same dollar amount in each week, then divide by that week's hours. Equal-hour (§ 778.120(b)) divides the period commission by period hours first, then applies that cents-per-hour increase to this week's hours and OT.
Same as /flsa-7i-commission/?
No. 7(i) can eliminate weekly OT. 778.120 computes the OT still due when commissions are deferred and hard to pin to weeks.
Same as /massachusetts-commission-overtime/?
No. MA keeps commissions out of RR. 778.120 puts the allocated share in RR and pays only extra half-time.
What if commissions are identifiable by week?
Use § 778.119 (allocate to the weeks actually earned) — not this equal-allocation page.