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

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 206 et seq., establishes that commissioned employees must earn at least the federal minimum wage of $7.25 per hour when averaged over the hours worked in each pay period. The FLSA does not prohibit commission-based compensation structures, but it does require that the total compensation, including commissions, must meet minimum wage thresholds. Commissions are calculated by dividing total compensation (including commissions) by total hours worked; if the result is less than the minimum wage, the employer must make up the difference.

The EEOC enforces FLSA wage and hour requirements. Commission structures must also comply with overtime rules under the FLSA; if a commissioned employee works overtime, the overtime rate applies to the overtime hours. The FLSA applies to employers with at least two employees engaged in interstate commerce. Under federal law, employers may not make illegal deductions from commissions that result in wages falling below minimum wage. The remedy for FLSA violations includes unpaid wages, liquidated damages equal to the unpaid wages, and in some cases, attorney fees and court costs.

Virginia Code § 40.1-29.1 specifically protects commissioned employees by requiring all earned wages—including commissions—to be paid in full without unauthorized deductions. Virginia's law is stronger than the federal baseline in several respects. First, Virginia requires payment of earned commissions regardless of whether a written agreement exists, whereas federal law focuses on the compensation structure itself. Second, Virginia explicitly addresses the termination scenario through § 40.1-29.2, which mandates that accrued but unpaid commissions must be paid at termination unless the employee and employer have a valid written agreement specifically authorizing commission forfeiture under defined conditions.

Virginia's minimum wage is currently $12.00 per hour (effective July 1, 2024), which is higher than the federal minimum of $7.25. This means commission-paid employees must have their total compensation average to at least $12.00 per hour. Virginia Code § 40.1-28.1 broadly defines wages to include all compensation earned by an employee for labor or services rendered, explicitly incorporating commissions within the definition.

Under Virginia law, employers may only deduct commissions if: (1) the employee provides written authorization, and (2) the deduction does not reduce the employee's pay below the Virginia minimum wage. Virginia law applies to all employers with employees in the state, regardless of size or interstate commerce status—broader coverage than the FLSA's two-employee threshold. The Virginia Department of Labor enforces these protections and receives wage claims. Remedies under Virginia law include payment of all unpaid wages, penalties of up to $10,000 for willful violations, and civil liability for damages. Virginia also permits recovery of attorney fees and court costs in wage claims.

Virginia law does not apply to independent contractors, who are not employees and therefore not entitled to commission protections under § 40.1-29.1. The key test for independent contractor status is whether the worker exercises independent judgment and maintains control over the work method; however, misclassifying an employee as an independent contractor to avoid paying commissions violates Virginia wage law.

Employees exempt from Virginia's minimum wage and overtime requirements—such as certain executives, professionals, and administrative employees under the FLSA salary basis test—may be paid on a commission-only basis, provided the total compensation still meets minimum wage requirements when averaged over hours worked. However, exemptions are narrowly construed in Virginia, and the burden is on the employer to prove exemption status.

Written commission agreements that are clear and unambiguous are enforceable, including agreements that reduce or forfeit commissions under specified conditions (such as failure to collect payment from customers or customer cancellation within a trial period). However, forfeiture clauses must be reasonable and cannot eliminate all commission compensation. Commissions earned before termination cannot be forfeited; only future commissions under a prospective commission structure may be subject to agreed-upon conditions.

Sales employees working on straight commission are still covered by Virginia wage and hour law. If a commission-only employee's hourly rate (total commissions divided by hours worked) falls below Virginia's minimum wage, the employer must make up the difference. At-will employment does not override commission payment obligations; an at-will employee cannot be terminated to avoid paying earned commissions. Implied contracts based on oral promises or past practice may also create enforceable commission rights, though written agreements are always preferable.

Step 1: Document the commission arrangement and all earnings. Keep copies of any written commission agreement or email correspondence outlining the commission structure, rates, and terms. Maintain detailed records of: (a) dates and amounts of sales or services performed, (b) the commission owed on each transaction, (c) dates you notified your employer of the completed work, and (d) dates and amounts of any commission payments received. If commissions are withheld or reduced, document the reason given by your employer and any communication about the deduction. Take screenshots of payment stubs, emails, sales records, and customer confirmations. Create a spreadsheet showing expected commissions versus actual payments received.

Step 2: Address the issue internally before filing a claim. Send a written request (email or certified letter) to your employer's human resources department or supervisor asking for clarification of the commission owed, the reason for non-payment or reduction, and a timeline for payment. Use specific language: "I am requesting payment of $X in commissions earned on [dates] under our agreement dated [date], with a breakdown of each transaction." Request a written response within 10 business days. Avoid emotional language; keep communication professional and factual. This creates a paper trail and sometimes resolves the issue without further action. If the employer responds with a written explanation you dispute, document that response and your rebuttal.

Step 3: File a wage claim with the Virginia Department of Labor if internal resolution fails. Visit the Virginia Department of Labor website at www.doli.virginia.gov or call (804) 786-2377 to obtain the wage claim form (Form WH-5 or current equivalent). You have five years from the date the commission was earned to file. Complete the form with: (a) your name, address, and contact information, (b) your employer's name and address, (c) the specific dates commissions were earned, (d) the amount owed, (e) a description of the commission agreement (written or oral), and (f) documentation of the violation. Submit the form to the Virginia Department of Labor, Division of Labor and Employment Law, 600 East Main Street, Richmond, VA 23219. Keep a copy for your records and request a receipt of filing.

Step 4: Understand the investigation and resolution process. Once filed, the Department of Labor will contact your employer and request a response within a set timeframe (typically 10-15 days). The department conducts an investigation, which may include reviewing payroll records, the written commission agreement, and communication between you and your employer. The investigation typically takes 4-8 weeks, though complex cases may take longer. You may be asked to provide additional documentation or testify about the commission arrangement. The department will issue a determination stating whether a violation occurred and, if so, the amount owed. If the employer disputes the determination, they have the right to appeal.

Step 5: Consult an employment attorney if the claim is substantial or the employer contests it. Contact an employment law attorney in Virginia if: (a) the unpaid commissions exceed $5,000, (b) your employer retaliates against you for filing a claim, (c) the Department of Labor's determination is appealed, or (d) you need help calculating damages or proving the commission agreement. An employment attorney can file a civil lawsuit in Virginia district court to recover unpaid commissions, statutory penalties, and attorney fees if the Department of Labor determination is not satisfactory. Many employment attorneys work on contingency for wage claims, meaning you pay no upfront fees. Attorney consultation typically costs $150-400 per hour if not on contingency. Contact the Virginia State Bar Lawyer Referral Service at (804) 775-0500 for referrals to employment law specialists.