Avoid Two-Tier Benefit Policy — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Avoid Two-Tier Benefit Policy

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in Human Resources

Q. We offer all employees two weeks' paid vacation a year. If an employee chooses a 100-percent, full-commission pay structure, how should we set her pay for vacation? The employee wants to take her annual pay divided by 52 weeks, but we feel that's unfair to the employees who are on salary plus commission, because their vacation pay is based on their base salary divided by 52 weeks. Is there a correct and legal way to figure this? —R.D., Florida

A. First of all, you aren't required to give paid vacation to any employees on commission. Moreover, there's no mandatory formula for computing paid vacation for commissioned employees. Your best bet is to use a formula that's fair to everyone and meets your business needs. In your situation, calculating vacation pay based on total compensation (whatever that may be, salary and/or commissions) would be fine, as long as you measure it consistently.

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