FLSA · retail / service commissions · § 7(i)
FLSA 7(i) commissioned employees (retail/service)
29 U.S.C. § 207(i) / 29 CFR 779.412–.421 / WHD Fact Sheet #20: employees of a retail or service establishment paid in whole or part on commissions owe no § 207(a) overtime when the regular rate exceeds 1.5× federal MW ($7.25 → $10.875) and commissions are more than half of compensation for a representative period ≥1 month. Any gate fails → 29 CFR 778.117 commissions in RR + extra half-time after 40. Classic 100% commission $1,000 / 50h → $1,000 (778.117 $1,100; MA Sullivan $1,225). Not MA § 1A. Not FLSA 40 hourly-only. Not 778.117 card alone. Not tip-OT.
How § 7(i) pays
Section 7(a) ordinarily requires 1.5× the regular rate after 40. Subsection (i) is a complete overtime exemption — not a different weekly threshold — when all three statutory conditions hold. WHD Fact Sheet #20: unless all three are met, overtime premium must be paid for hours over 40 at time and one-half the regular rate.
Regular-rate gate. Total earnings attributed to the period ÷ hours worked must exceed 1.5× the federal minimum ($10.875 at $7.25). WHD FLSA2026-4: that floor is the federal § 206 rate, not a higher state MW. $450 commissions / 50h → RR $9 → gate fails → extra half-time $45 → $495.
Commission-share gate. More than 50% of compensation for a representative period (not less than one month, not more than one year) must be commissions on goods or services (29 CFR 779.415–.416). This page’s week stands in for that period unless you uncheck the box and type a longer mix. $12/h + $200 commissions / 50h → share 25% fails → $880. $12/h + $800 commissions / 50h → share ~57%, RR $28 → exempt $1,400 (778.117 would be $1,540).
Retail/service gate. 75% of annual dollar volume of sales of goods or services not for resale and recognized as retail in the industry (29 CFR 779.24 / .411). Uncheck the box for wholesale-for-resale or non-retail offices: even 100% commission $1,000 / 50h → 778.117 $1,100.
100% commission $1,000 · five 10h days → RR $20 · share 100% → exempt $1,000 (778.117 $1,100; MA Sullivan $1,225).
$12/h + $200 comm · 50h → share 25% fail → RR $16 · half-time $80 → $880.
$12/h + $800 comm · 50h → exempt $1,400 (778.117 $1,540).
$450 commission · 50h → RR $9 fails 1.5× MW → $495.
100% commission $1,000 · 50h, retail box off → $1,100.
Sources
- 29 U.S.C. § 207(i) — Maximum hours; retail/service commissioned employees (Cornell LII, HTTP 200)
- 29 U.S.C. § 207 (GovInfo USCODE-2023, HTTP 200)
- WHD Fact Sheet #20 — Employees paid commissions by retail establishments who are exempt under section 7(i) (HTTP 200)
- 29 CFR § 779.412 — Exemption of certain retail or service employees (Cornell, HTTP 200)
- 29 CFR § 778.117 — Commission payments; failed-gate half-time (Cornell, HTTP 200)
FAQ
When does § 7(i) turn overtime off?
Retail/service + RR > 1.5× federal MW ($10.875) + commissions > half of representative-period pay. All three → no weekly-40 OT.
Classic $1,000 / 50h?
Exempt $1,000. Same punches 778.117 $1,100. MA Sullivan $1,225.
Same as Massachusetts commission OT?
No. /massachusetts-commission-overtime/ excludes commissions from RR and adds separate OT. This page can pay $0 overtime premium.
Same as FLSA 40 or 778.117 card?
No. /overtime/ ignores commissions. /flsa-regular-rate/ is the 778.117/778.209 card, not the three 7(i) gates.
Tip overtime?
No. Tips are not commissions. Tip-OT is out of punch scope (not this page; not HI/NJ/NY tip-credit calculators).
Who is covered?
Commissioned employees of a qualifying retail or service establishment. Wholesale-for-resale, non-retail offices, and outside the three gates fall back to 778.117 half-time. State OT (MA § 1A) can still require more.