Commissioned Employee Legality

The biggest wage-claim liability in your shop isn't your pay plan. It's the person in your office editing payroll by hand.

If someone on your team is manually adjusting commission payouts, eyeballing overtime, or "fixing" the numbers before payroll runs, you are one slow week away from a lawsuit. And you won't see it coming.

Here's why.

Overtime on commission is a calculation, not a judgment call.

Overtime for commissioned employees doesn't work the way most office staff assume. It's not time-and-a-half on base hours. The FLSA requires a regular rate of pay. Commissions get divided across total hours worked, with overtime calculated on top of that blended rate.

That's not something a person should be doing in their head or in a spreadsheet on a Friday afternoon. But that's exactly what's happening in most shops. Someone in the office looks at the hours, applies a 1.5x they think is right, and moves on. Every time they guess, you're exposed. In many states, a wrong guess is a recoverable wage claim.

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The minimum wage floor is the one nobody is watching.

Every commissioned tech is entitled to at least minimum wage for every hour worked. Every state, every pay plan, no exceptions.

Most weeks your techs clear it easily, so nobody checks.

Then comes the bad week. Four callbacks and a warranty job. A new tech with a slow Tuesday through Friday. Their total commission divided by hours worked drops below the floor. The moment it does, you legally owe the difference.

Does the person running your payroll catch that? Are they calculating commission-divided-by-hours for every tech, every week, to verify the floor? Almost certainly not. They're processing payroll, not auditing it. So the violation goes out the door, signed off by a human who had no way to know.

A person plus a spreadsheet has no guardrails.

ServiceTitan Configurable Payroll handles one thing well: clean, simple structures. Flat percentage of top line. Straight commission off the invoice.

The moment you add real complexity, it runs out of road. Tiered GP commission, helper and apprentice deductions, ISR splits, material cost thresholds, spiffs layered on top. These aren't edge cases. They're how most competitive shops actually pay their people.

So what do operators do? They run the native tool for what it can handle and hand the rest to someone in the office to patch together manually.

That manual layer is where the errors live. It's also where the compliance gaps live, because a person editing numbers by hand cannot verify minimum wage per employee per week, cannot calculate the blended regular rate for overtime, and cannot flag when a payout falls below a legal threshold.

Those checks aren't happening anywhere. They're just assumed to be happening because a trusted person is doing the work.

One person's mistake doesn't stay one mistake.

Wage claims are among the most common employment lawsuits in home services. They're expensive not because the individual amounts are large, but because they go class action.

A manual process makes the same mistake every single week. So the moment one tech discovers a valid claim, it isn't one tech anymore. It's every tech, every week your office staff made the same call, going back years. One person's honest judgment error becomes the foundation of a class action.

The operators getting hit aren't running bad pay plans. They're running good ones and trusting a human in the office to enforce legal minimums that no human can reliably track by hand.

You can't have someone making these calls manually.

Not because they're not capable. Because no person is. Minimum wage floors and blended overtime rates have to be verified automatically, every employee, every week. If they're not automated, they're not being verified at all.

If you've got 10 or more techs on a complex pay plan and the last line of defense is someone in the office with a spreadsheet, it's worth 30 minutes to find out what's already gone out the door.

Don