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Calculating vacation pay for salary+commission

We have a new situation at our company. Some employees who were previously paid by the hour are now paid a salary plus commission on services sold by them. We have always paid them vacation, holiday, and sick pay at their hourly rate. Now how do we pay these items? Is it legal in Florida to pay just the salary, or do we need to average their commission with their salary to determine the rate? We are a small workplace with less than 40 employees in Florida.

There are three different ways that employers typically use when their employees are paid commissions, they are:

1. You can use the minimum wage to pay vacation, holiday or sick.

2. You can establish a rate and use a draw method.

3. You can use the total wages earned (base, commissions and bonus (if any) over the previous quarter or another period of time and divide by the number of weeks in the quarter or period.

In Florida, commissions are┬áincluded┬áin the definition of what constitutes “earned income” and is also included in the calculation of unemployment compensation. The best practice, since your business is in Florida is to use method 3.

This entry was posted on Saturday, September 22nd, 2012 at 8:21 am and is filed under
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