Commission Pay Laws in Georgia: Your Rights as a Commission Worker

Under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 206, commission employees must earn at least the federal minimum wage of $7.25 per hour for all hours worked. The FLSA applies to employers with annual gross revenues of at least $500,000 or who are engaged in interstate commerce. Commission is treated as regular rate compensation for overtime calculations; if an employee works overtime, the overtime rate must be calculated using the regular rate that includes commission earnings, and the employee is owed one and one-half times that rate for hours over 40 in a workweek.

The FLSA does not require a written commission agreement, but best practices strongly suggest one. The statute does not prohibit chargebacks or deductions for customer refunds from commissions, provided the deduction does not reduce the employee's compensation below minimum wage for hours worked. The Equal Employment Opportunity Commission (EEOC) enforces the FLSA for wage and hour violations. Employees have three years to file a wage claim under the FLSA, or two years if the violation is deemed unintentional. Remedies include back pay, liquidated damages (an equal amount to back pay), and attorney's fees.

Georgia's Payment of Wages Law, O.C.G.A. § 34-7-2, requires all wages earned to be paid on regular paydays and prohibits deductions from wages except those authorized by law or by written agreement signed by the employee. This state law aligns with federal minimum wage requirements and does not provide a higher minimum wage threshold; Georgia has adopted the federal minimum wage of $7.25 per hour.

Under Georgia law, a commission agreement should be in writing to avoid disputes. The law at O.C.G.A. § 34-7-2(c) permits deductions from wages only if the employee has signed a written authorization. This means employers cannot unilaterally deduct commission for customer refunds, chargebacks, merchandise returns, or other losses without a written agreement explicitly permitting such deductions. If a deduction occurs without written authorization, it may constitute an unlawful wage deduction subject to penalties.

Georgia employers are not required to maintain a minimum number of employees to be subject to the Payment of Wages Law; it applies to all employers in the state. However, Georgia recognizes at-will employment, meaning employers may modify, reduce, or eliminate commission structures at any time, provided they give notice. The state does not require advance notice of commission plan changes, but notice before the change takes effect is a best practice to avoid employee disputes.

Georgia does not have a specific statute of limitations for wage claims under state law, but the general civil statute of limitations is four years for written contracts and six years for oral contracts. If a commission dispute involves federal FLSA violations, the federal three-year lookback applies. Remedies under Georgia law include recovery of unpaid wages plus attorney's fees and court costs if the employee prevails, though punitive damages are not available under the Payment of Wages Law alone.

Georgia employers may modify or eliminate commission structures at any time due to at-will employment status, provided they give notice before implementation. Employers are not required to offer commission pay; it is optional compensation.

Commission may be subject to lawful deductions if the employee has signed a written agreement authorizing them. Permissible deductions include those for customer refunds, chargebacks, merchandise returns, and disputed transactions, but only if the written agreement explicitly authorizes such deductions and the deduction does not reduce the employee's hourly compensation below the federal minimum wage of $7.25.

Independent contractors are exempt from the Payment of Wages Law; commissions paid to independent contractors are not regulated under Georgia wage laws, provided the worker meets the legal definition of an independent contractor under Georgia and federal law. Misclassification as an independent contractor when the worker is actually an employee is a violation and exposes the employer to wage and hour liability.

Salespersons and certain commissioned employees in industries such as real estate, insurance, and automotive sales may have different regulatory frameworks at the federal level (e.g., motor carrier employees). Employees on temporary layoff or suspension of work do not accrue commissions during unpaid periods unless the employment agreement provides otherwise.

Commissions tied to sales that are later reversed, disputed, or uncollectible by the customer may be subject to chargeback if the written agreement permits it. However, if no written agreement exists, the employer cannot deduct the commission chargeback. Employers cannot use commission structures to avoid overtime obligations; all commission employees must be paid overtime on qualifying hours worked over 40 per week.

Step 1 — Document Everything: Keep detailed records of all commission earned, including sales made, dates, dollar amounts, and the written commission agreement. Save copies of paystubs showing commission payments, emails from managers confirming sales or commission calculations, and any written communications about deductions, chargebacks, or modifications to the commission plan. Document the number of hours worked daily and weekly to establish how commissions relate to hourly compensation and overtime eligibility. If a chargeback occurs, retain the documentation showing the amount deducted and the reason given.

Step 2 — Address Internally: Request a written explanation from your employer or manager about any disputed commission, unpaid commission, or unexpected deduction. Send an email to HR or management outlining the specific commission(s) in question, the agreed-upon rate or formula, and the amount you believe is owed. Ask for a written response within a specific timeframe (e.g., 10 business days). Document the date you raised the concern and the response received. Most employers will resolve commission disputes at this stage if the employee has clear documentation of the agreement and work performed. Preserve copies of all internal communications.

Step 3 — File a Wage Claim: If internal resolution fails, file a wage claim with the Georgia Department of Labor, Wage and Hour Division (if it qualifies as a state violation under the Payment of Wages Law). However, for federal FLSA violations, file a charge with the U.S. Department of Labor Wage and Hour Division (WHD) or contact the EEOC. The federal deadline is generally three years from the date of the violation. For state claims, follow up directly with the Georgia Department of Labor. The wage claim should include: your name, address, and phone number; employer name and address; dates of employment; description of the commission dispute; amount claimed as owed; copies of the commission agreement and paystubs; and any documentation of internal complaint attempts. The agency will investigate at no cost to you.

Step 4 — Investigation Process: Once filed, the Georgia Department of Labor or the DOL Wage and Hour Division will contact your employer for records and a response to the claim. The investigation typically takes 30 to 120 days depending on complexity and case load. The agency may request your work records, sales records, and communications with the employer. You may be asked to provide additional evidence of the commission structure or hours worked. The employer will have an opportunity to respond with its own documentation, including the written agreement and chargeback authorization if applicable. Do not expect frequent updates; government agencies move slowly. You will be notified of the investigation outcome in writing.

Step 5 — Legal Action and Attorney Consultation: If the agency's investigation does not resolve the dispute or if you prefer private action, consult an employment attorney specializing in wage and hour law. An attorney can evaluate whether you have a viable claim under the FLSA (which allows for collective action by multiple employees with similar claims), state wage law, or both. Many employment attorneys work on contingency (no upfront fee; they take a percentage of the recovery) for wage claims. An attorney can file a lawsuit in Georgia state court or, if the claim involves FLSA violations and meets jurisdictional thresholds, in federal court. The attorney can also help determine whether you are entitled to back pay, liquidated damages, attorney's fees, and other remedies. Consult early if the amount owed is substantial or if the employer has shown a pattern of non-payment.