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Calculating Vacation Pay for Employees with Commission-Based Pay

by Hank Nunn - Mar 12, 2012

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How do you calculate vacation pay for techs and painters who work on commission?

Asked by Jorge Rodriguez, Round Rock, Texas

First, I suggest you check with your state employment department for local rules/regulations that may cover the vacation pay issue.

The most common method of handling vacation for flat-rate employees is to pay them their base flat rate for the time off.

Example: the tech is taking 40 hours of vacation and works at a flat rate of $15 per hour. Vacation pay is $600.

Others use an average pay per week for the past year to come up with a vacation number.

Example: The tech turned an average of 60 hours per week over the past year. Vacation pay is $900 (60 average hours x $15 per hour).

Whatever method you decide on, you should determine what it is before you hire the technician and included it in your employee handbook.

But check with your state to see what’s legal first; then, if you don’t have an employee handbook, look for a human resources consultant who can assist you in building one.

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Hank Nunn is a 35-year collision industry veteran. Among his many roles, he has been an adjuster, shop owner, technician, consultant and trainer. Currently, he’s western regional collision director for AutoNation. He may be reached at h_nunn@msn.com.