Three Step Guide . . . [continued from page 23] • Sarah's total pay = $1,500 + (10 hours x 1.5 x $37.50/hour) = $2062.50 D. Commissions Plus Salary, Where the Employee's Salary Is Intended to Cover More Than 40 Hours of Work. A final variation on the formula occurs where the employer is paid through a combination of salary and commissions, and the salary payments are intended to cover more than 40 hours of work. Under both the FLSA and Wisconsin law, when this occurs the employee is entitled to an additional overtime premium for hours worked in excess of 40 at the rate of onehalf the regular rate of pay. Thus, for this example, suppose that Sarah and her employer have an understanding that Sarah's base salary is intended to compensate her for 50 hours of work. During a 50-hour workweek, Sarah earns a base salary of$1,000, plus $500 more in commissions. The formula is as follows:
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• Regular rate= $1,500/50 hours = $30/hour. • Total compensation formula = base salary and commissions + (10 hours @ one-half the regular rate of pay) • Sarah's total pay = $1,500 + (10 hours x .5 x $30/hour) = $1650
Conclusion Preventive strategies can go a long way to avoiding regulatory audits or litigation over wage and hour policies. While the compensation formulas outlined should address the majority of situations, they are by no means exhaustive. For example, a different formula applies where the employer cannot determine the exact workweek during which the employee earned commissions. For assistance with any of these issues, contact Dan McAlvanah at (608) 260-2489 or dmcalvanah@ axley.com.
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