The three plans in plain words
- Straight hourly. The tech gets the same rate for every hour, plus time and a half for overtime. Easy to budget. Pay doesn't move when they bill more or less.
- Commission. The tech gets a percent of what they bill — either of total sales, or of labor (sales minus parts). A big week pays big, a slow week pays small. The law still sets a floor (see below).
- Hybrid. Some mix of the two. This calculator handles the two most common kinds: a guaranteed hourly floor where the tech gets whichever is higher, floor or commission; or a lower hourly base with commission paid on top.
What "draw vs commission" means
A draw is money you promise the tech each pay period no matter what they sell. At the end of the period you compare it with the commission they earned. If commission is higher, they get the commission. If commission is lower, they keep the draw.
The difference is what happens to the shortfall. With a non-recoverable draw, it's gone — the draw works like an hourly floor. That's the "whichever is higher" hybrid in this calculator. With a recoverable draw, the shortfall is carried forward and taken out of future commission. This calculator looks at one week, so it treats the floor as non-recoverable. If you run a recoverable draw, have your payroll provider check that every week still meets minimum wage and overtime after the carry-forward, and put the rules in writing.
Overtime and minimum wage on commission (federal rules)
This is general information, not legal advice. State and city laws can be stricter — check with your payroll provider or an employment attorney before changing a pay plan.
- Commission counts toward overtime. Federal regulation says commissions "are payments for hours worked and must be included in the regular rate," whether the commission is the tech's only pay or is paid on top of an hourly rate. (29 CFR 778.117)
- How the overtime is figured. For a commission paid weekly, it is "added to the employee's other earnings for that workweek," the total is divided by all hours worked that week to get the regular rate, and the employee "must then be paid extra compensation at one-half of that rate for each hour worked in excess of the applicable maximum hours standard." (29 CFR 778.118) That's the "overtime premium" row above: the straight-time pay already covers every hour once, so each overtime hour adds half the regular rate on top — which works out to 1.5× the regular rate for those hours.
- Minimum wage for every hour. Federal law looks at the workweek: all the hours worked that week "must be compensated for in accordance with the minimum wage and overtime pay provisions of the Act." (29 CFR 776.4(a)) The federal minimum wage is $7.25 an hour (29 CFR 548.305(c) uses that figure). So on a slow week, a commission-only tech's straight-time pay has to be topped up to at least minimum wage × hours. The calculator does that and shows it in the "minimum-wage top-up" row.
This assumes a non-exempt tech paid weekly. Commissions that are figured over a longer period (monthly, for example) have their own rules for spreading the overtime back over the weeks — ask your payroll provider.
Worked example
With the example numbers above: 45 hours (5 of them overtime), $6,000 billed, $1,500 in parts, 20% commission on labor, $25 an hour, and an $18 hourly floor. Commission is 20% × ($6,000 − $1,500) = $900.
- A. Hourly: $25 × 45 = $1,125, plus ½ × $25 × 5 = $62.50 overtime premium = $1,187.50 (19.8% of revenue).
- B. Commission: regular rate $900 ÷ 45 = $20.00. Overtime premium ½ × $20 × 5 = $50. Pay = $950 (15.8% of revenue). Paying the $900 with no overtime premium would shortchange the tech $50.
- C. Hybrid (floor): the floor is $18 × 45 = $810. Commission ($900) is higher, so it wins, and pay is the same as plan B: $950. On a slow week with $2,000 billed, commission would be $100 and the floor would pay instead.
Try a slow week: set revenue to 0. Commission drops to $0, and the commission plan falls to the minimum-wage top-up — the legal floor, and probably not a paycheck anyone stays for.
Things this leaves out
- Spiffs and bonuses. Promised spiffs generally belong in the regular rate too. Our guide to HVAC tech commission and spiff pay plans covers that.
- Callbacks and clawbacks. Taking back commission on a callback changes what the tech really earned that week.
- Exempt employees and state rules. The overtime math assumes a non-exempt tech under the federal 40-hour rule. Some states add daily overtime or a higher minimum wage.
- Behavior. The same week can look very different once pay changes — commission tends to change how many hours techs want and what they sell.
We don't quote typical commission rates or tech labor % of revenue, because we haven't found a solid public source for them. That's what the anonymous Owner Numbers survey collects, so owners can compare against real peers.
Related tools and guides
Want the real cost of a tech hour once taxes, workers' comp, and benefits are in? The HVAC labor burden calculator gives you the burden % to put above. Adding a tech? The should I hire another HVAC tech payback calculator shows how long a new hire takes to pay back. For the pros and cons of each plan and how to keep commission from turning into overselling, read HVAC Tech Commission & Spiff Pay Plans (2026).