Commission-Only Jobs in NJ: Why You're Still Entitled to Minimum Wage Every Pay Period

Commission-based compensation is common in industries such as retail sales, automotive sales, real estate support services, and business development. Workers are often told their earnings depend entirely on what they sell, which creates the expectation that a slow month results in little or no pay. 

Commission-only employees still receive at least minimum wage for all hours worked in a pay period.

Sales employees sometimes work for weeks, meeting clients and generating leads before seeing commissions that properly reflect their time. In cases reviewed by our team at Brandon J. Broderick, employers often label these roles as commission-only. State and federal laws still require minimum wage compliance. When compensation doesn’t meet the threshold, the employer is typically responsible for covering the difference. 

This article explains how commission-only compensation is structured, how minimum hourly rate requirements apply, how employers evaluate compliance during each pay period, and when to speak with a wage and hour lawyer in New Jersey. 

Commission-Only Workers and Minimum Wage Rights in New Jersey

Most employees are entitled to the minimum rate for every hour worked, under both the federal Fair Labor Standards Act and New Jersey's Wage and Hour Law. 

Being paid by commission changes how the pay gets calculated, not whether the minimum-wage floor applies. New Jersey's minimum wage in 2026 is $15.92 an hour for most employers. This is above the $7.25 federal rate. When the state and federal figures differ, the higher one governs. A commission worker in New Jersey is measured against $15.92.

"Commission only" describes a pay structure, not an exemption. An employer can choose to pay primarily through percentages. However, unless a specific exemption applies, the employer cannot allow a worker’s effective hourly pay to fall below the minimum standard for all hours worked. 

A common arrangement disguises the problem from the start. Many "commission-only" jobs are labeled as independent contractor positions. 

New Jersey applies the ABC test when determining whether a worker is an employee or an independent contractor. Misclassification often comes up in commission-based roles, including real estate agents and sales employees. When building a claim, our legal team starts by looking at how the salesperson was labeled. A misclassification issue can change the analysis of minimum hourly rate and overtime protections. 

Hours worked cover more than the time spent closing a sale. Time on the sales floor, required meetings, training sessions, opening and closing duties, mandatory events, and travel between locations all count as paid. Some workers routinely put in unpaid hours doing work the employer requires, and every one of those hours figures into the calculation.

Few commission workers realize they are underpaid. No hourly rate appears on the pay stub for comparison, and the promise of unlimited earnings prevents closer review. The key analysis happens on a weekly basis. Speaking with a wage and hour attorney in New Jersey can help determine whether pay complies with the law. 

How Minimum Wage Applies to Pay Rights in New Jersey Commission Jobs

Minimum-wage compliance is measured on a workweek basis, not across a month or year. Total earnings in the workweek divided by total hours worked that week equals the effective hourly rate. If that rate falls below $15.92, the employer owes the difference for that week. 

For example, a retail sales worker puts in 40 hours during a slow week and earns $400, for an effective rate of $10 an hour. New Jersey requires $15.92 times 40 hours, or $636.80. The employer owes $236.80 in make-up pay for that week. 

A strong week changes the picture. For instance, 40 hours with $1,200 in percentages works out to $30 an hour. No additional compensation is required. But that kind of week does not erase a slower one. When a workweek falls below the minimum standard, the employer must make up the difference, since meeting the minimum is a legal obligation, not optional. 

A “draw against commission” is an advance on future earnings. Employers often take it back from later pay periods. But if repayment causes a worker’s pay to fall below the minimum rate in that week, it becomes illegal. A draw still cannot bring pay under the legal floor. 

Commission workers who aren’t exempt are entitled to overtime. Any hours over 40 in a workweek must be paid at time-and-a-half. The regular rate includes percentages, increasing the overtime calculations. Overtime exemptions can apply in certain financial industry roles, including executive positions on Wall Street and other highly compensated employees who meet specific legal thresholds. In practice, many workers receive no overtime pay at all, which can be a separate violation. 

Deductions create another issue. Charging a worker for returns, chargebacks, uniforms, or register shortages cannot reduce pay below the minimum rate for the week, no matter what the agreement says. 

Improper paycheck deductions also affect the salary basis test and violations of overtime exemption rules. The only way an employer avoids the minimum-wage floor is through a specific exemption. 

When Minimum Wage and Overtime Exemptions Apply to NJ Commission Workers 

The outside sales exemption is one of the few situations in which commission-only compensation is permitted. Employees who qualify aren’t subject to minimum hourly rate or overtime requirements.

The worker's primary duty has to be making sales, and the worker has to customarily work away from the employer's place of business. Inside sales, conducted by phone, in an office or in a call center, don’t qualify. According to U.S. Department of Labor Fact Sheet #17F, the location and nature of the work matter as much as the compensation structure.

Employers sometimes point to the 7(i) retail or service exemption when defending these arrangements. It can be important, but workers covered by the exemption are still entitled to minimum wage.

To qualify, the employee's regular rate of pay must exceed one and one-half times the federal minimum wage, currently $10.88 per hour under Opinion Letter FLSA2026-4. Commissions must account for more than half of earnings over a representative period of at least one month. When those conditions are met, the exemption affects overtime obligations only.

Common exemptions employers claim that don’t hold up:

• Calling an inside or showroom salesperson an “outside sales” employee
• Labeling a worker an independent contractor when the ABC test makes them an employee
• Treating the 7(i) exemption as a full wage waiver, when it only removes overtime
• Using 7(i) for a business that is not a retail or service establishment
• Applying 7(i when the worker’s regular rate falls below $10.88
• Using “manager” or “administrative” titles when job duties do not support a white-collar exemption

Most commission workers in New Jersey are still entitled to minimum hourly rates. This includes many employees in retail, inside sales, car dealerships, and gyms. In cases reviewed by our attorneys at Brandon J. Broderick, we often see that these exemptions are narrowly defined. Employers must be able to demonstrate that all requirements are met before relying on them. 

In March 2026, the New Jersey Department of Labor added 20 businesses to the Workplace Accountability in Labor List (The WALL). Those employers collectively owe $1,077,365.52 in fees and penalties. Altogether, 357 businesses currently appear on the list, carrying more than $32 million in total liabilities. 

Workers who believe they have been paid improperly have several options for pursuing unpaid wages.

Commission Job Workers and Minimum Hourly Pay Rights in New Jersey

New Jersey employees are protected by both state and federal laws, including the Wage and Hour Law, the Wage Payment Law, and the FLSA. The Wage Theft Act added significant remedies under state law. They include a six-year recovery period, liquidated damages of up to 200% of the unpaid amount, and protections for workers who report violations. The value of a claim sometimes exceeds the amount of the original underpayment. 

What a commission worker should track and gather:

• A personal log of hours worked each week, including meetings, training, and floor time.
• Every commission statement and pay stub.
• The percentage agreement or plan document.
• Records of any draws, chargebacks, or deductions taken from pay.
• Notes on whether the work was inside, in a showroom or phone, or outside at customer sites, which decides the outside-sales question.

Accurate recordkeeping is the employer's responsibility. When records are missing or incomplete, workers rely on reasonable estimates to help establish the hours they worked and the wages they are owed.

These cases rarely involve a single person. A commission pay plan applies to an entire sales team through the same structure, so a shortfall built into the plan affects everyone on the floor, and the claims frequently proceed as class or collective actions. One representative's complaint can reveal a pay practice that shorted the whole staff.

The exemption analysis is technical, and the math must be run week by week. Determining how an exemption actually applies requires a close review, along with calculating any shortfall across the full period. That calculation affects the total recovery and how far back the claim can reach before time limits reduce it. 

If you are facing unpaid wages, exemption issues, or retaliation, contact us today for a free consultation. Our team can help evaluate evidence, file claims, and guide workers through the process.