Static educational checklist — not a calculator. No pay inputs, no commission engines, no live regular-rate or overtime math. Spot common FLSA § 7(i) retail-or-service commissioned-employee overtime-exemption red flags under 29 U.S.C. § 207(i) / 29 CFR Part 779 (establishment character, regular-rate floor, >50% commissions in a representative period), with Massachusetts Sullivan / commission-exclusion overlays. Distinct from tip-credit § 3(m), piece-rate/day-rate regular-rate, Belo § 7(f), fluctuating workweek, salary-basis Part 541, OT pay-stub arithmetic, unauthorized wage-deduction / kickbacks, and premium-credit cheat-sheet pages.
Federal baseline — three § 7(i) gates
Section 7(i) is a narrow overtime exemption for certain employees of a retail or service establishment. Claiming it generally requires all of: (1) the employer is that kind of establishment; (2) the employee’s regular rate of pay for the workweek exceeds one and one-half times the federal minimum wage under § 6; and (3) more than half of the employee’s compensation for a representative period (not less than one month) consists of commissions on goods or services. Fail any gate and ordinary FLSA overtime after 40 hours usually remains due. Many states do not mirror § 7(i) (or exclude commissions from the regular rate differently). This page does not compute regular rates, commission percentages, or OT — it only flags compliance red flags.
Checklist — commission / § 7(i) red flags
Non-retail / non-service establishment labeled “retail” so commissions wipe out OT. Flag wholesalers, manufacturers, B2B distributors, professional offices, and other non–retail-or-service operations that treat salespeople as § 7(i)-exempt because “they earn commissions.” Part 779’s retail/service concept is about the establishment’s sales character — not a job title or a commission plan alone.
Regular-rate floor ignored (or tested only against a higher state min wage). Flag weeks where the employee’s regular rate does not clearly exceed 1.5× the federal § 6 minimum for every hour worked in that workweek, or where payroll macros silently swap in a higher state MW for the § 7(i)(1) gate. Recent WHD guidance treats the federal floor as the § 7(i)(1) comparator even when state MW is higher — state OT rules may still independently require overtime.
“More than half commissions” claimed without a documented representative period. Flag employers who never pick a representative period of at least one month, who cherry-pick a high-commission month as “representative,” or who never re-test when pay mix shifts — § 7(i)(2) is a compensation-mix test over a period that typifies the employee’s current earning pattern, not a single good week.
Cite: 29 CFR § 779.412 et seq. (commission tests) · related Part 779 representative-period rules.
Draws, guarantees, or recoveries that turn “commissions” into straight wages. Flag recoverable draws booked as commissions when they function as fixed wages, never-settled advances that dominate pay, or “commission” labels on hourly-feeling guarantees that leave true commission share ≤50% of compensation for the representative period.
Tips, tip credit, or service charges confused with commissions. Flag stubs that count customer tips as “commissions” for the >50% test, or that bury tip-credit cash wages inside a fake § 7(i) story. Tips are generally not commissions; service charges / mandatory auto-gratuities can raise separate characterization questions — neither substitutes for a clean tip-credit analysis under § 3(m).
Piece-rate, day-rate, or production bonuses rebranded as § 7(i) commissions. Flag unit-pay or production incentives that are not commissions on retail/service sales of goods or services, then used to claim OT exemption — § 7(i) is not a general “incentive pay” wipe-out and is distinct from §§ 778.111–.112 piece/day-rate regular-rate math.
Belo / FWW / salary-basis labels stacked with § 7(i) to “cover” overtime. Flag handbooks that call the same plan Belo § 7(f), fluctuating workweek, exempt salary, and § 7(i) without testing each doctrine’s separate conditions — stacking labels does not create an exemption.
Massachusetts (and similar state) overlays ignored — commissions out of RR / separate OT still due. Flag MA retail/commission employers who assume federal § 7(i) also answers state OT, or who credit commissions against MA overtime. Under M.G.L. c. 151 / Sullivan, commissions are often excluded from the state regular rate and separate additional overtime can remain due even when federal § 7(i) analysis looks different.
Hours worked undercounted so the regular-rate floor “passes.” Flag omitted training, meetings, opening/closing, off-clock selling, or travel that shrinks the hours divisor and artificially inflates the regular rate used for the 1.5× federal MW gate — hours-worked doctrine still feeds the § 7(i)(1) test.
Records and wage statements that cannot reconstruct commissions vs other pay. Flag missing representative-period worksheets, unlabeled “spiffs,” commingled tip/commission lines, no workweek regular-rate backup for the 1.5× floor, and stubs that never show whether overtime was paid when any § 7(i) gate failed — Part 516 and state wage-statement rules still expect reconstructible wages.