Incentive Pay

In some businesses, tips and gratuities make up part of employees’ pay in addition to wages. In other businesses, piece rates, commissions and bonuses make up part of employees’ pay. You must understand the distinction between these forms of pay.

The distinction is important because certain wage and hour laws contain exceptions for commissioned employees (for example, timing of wage payments, final wages and exemptions from overtime) and determine whether and when payment of these types of wages is due.​​

  • Tips and Gratuities

    Tips and GratuitiesFood servers, valets and others performing services often receive tips or gratuities. Tips and gratuities are subject to income tax.  More »

    Read about a 2016 court case.
  • Bonuses

    BonusesA bonus is money you give to an employee in addition to the salary or hourly rate usually due as compensation.   More »

  • Commissions

    CommissionsCompensation can be considered a true commission only if it is based on a proportional amount of sales of your property or services.  More »