Payroll for field teams: hourly, commission, on-call

Why field payroll is different

Payroll is the largest check most home service companies write. In 2023, US plumbing, heating and air-conditioning contractors paid $89.5 billion in annual payroll and electrical contractors $77.8 billion^[3]. For an individual company, the risk is less the size of the bill than its complexity. A single service tech might, in one week, work hourly time, earn overtime, collect a sales commission, receive a spiff for a membership sale and be paid for an on-call shift.

Seasonal swings add to it. HVAC techs may be on call for emergencies and work overtime or irregular schedules in peak heating and cooling seasons^[4], overtime is common for electricians^[5], and pest control workers often work evenings and weekends^[6]. Payroll software built for salaried office staff struggles with all of this. Before you compare products, write down every way you actually pay people.

Pay plans you need to support

Most companies use two or three of these at once. The software must handle every one you use, with separate earning codes, so job costing and overtime calculations stay correct.

Rules that trip up contractors

• Overtime is weekly, not averaged. Non-exempt employees must be paid at least one and a half times their regular rate for hours over 40 in a workweek, which is a fixed, recurring 168-hour period; hours cannot be averaged across two or more weeks^[7].
• Commissions count. Under federal rules, commissions are payments for hours worked and must be included in the regular rate, however they are calculated and whenever they are paid^[1]. Many non-discretionary bonuses and spiffs are treated the same way; check with your payroll adviser.
• Drive time between jobs is work. Travel from job site to job site during the workday is hours worked and must be counted^[2].
• On-call time depends on the constraints. An employee required to stay on call on the employer's premises is working; one on call at home generally is not, unless the constraints on their freedom are significant^[2].
• State rules can be stricter. Some states have their own overtime rules, meal and rest break rules, pay frequency requirements and wage statement rules. Your software must apply the rules for every state where your techs work.

Worked example: overtime with commission

Example (fictional): an HVAC service tech earns $28 an hour and works 46 hours in a July workweek. He also earns $460 in sales commission for replacements sold that week.

1. 01

   Straight-time earnings

   Example: 46 hours × $28 = $1,288, plus $460 commission, gives total straight-time pay of $1,748.

2. 02

   Regular rate

   Example: $1,748 ÷ 46 hours = $38.00 an hour. The commission raises the regular rate because it counts as pay for hours worked.

3. 03

   Overtime premium

   Example: the straight-time part of overtime is already in the $1,748, so the premium owed is half the regular rate for each overtime hour: 0.5 × $38.00 × 6 = $114.

4. 04

   Total pay

   Example: $1,748 + $114 = $1,862 for the week.

Example of the common error: software that pays overtime only on the hourly wage calculates 40 × $28 + 6 × $42 + $460 = $1,832, which is $30 short for this one week. Across a team of techs and a whole cooling season, the underpayment and the exposure add up quickly.

Designing on-call and callout pay

Emergency coverage is where pay plans most often go wrong, because the rules depend on how restricted the tech is while waiting. Write the on-call policy down before you set it up in payroll, and answer these questions in it:

• How quickly must the tech respond to a page or call, and how far from the service area may they be? Tight limits make it more likely that waiting time counts as work.
• Is there a fixed stipend for each on-call shift, and is it treated as part of the regular rate for overtime purposes? Ask your payroll adviser.
• Is there a minimum paid time for each callout, and does drive time from home to the emergency count from the moment the tech leaves?
• How are callouts that push the tech past 40 hours in the workweek handled? They usually do, in peak weeks.
• How is the rotation shared, so the same techs are not carrying every weekend?

Set each element up as its own earning code. Separate codes let you see what emergency coverage really costs each month, and they make it easy to compare that cost with the emergency revenue it produces.

Features checklist

1. Time import from your field service app by job, including drive time and callout time, without retyping.
2. Multiple pay rates per employee, with earning codes for hourly, overtime, commission, spiffs, on-call and PTO.
3. Overtime calculated on the regular rate including commissions and non-discretionary bonuses, with the calculation shown on the pay stub or report.
4. Commission and spiff import from invoices or a spreadsheet, with an approval step before payroll runs.
5. Multi-state tax and labor rule support if techs cross state lines.
6. PTO and sick leave accrual by state and local rules.
7. Certified payroll reports if you do prevailing wage public or commercial work.
8. Job costing export: labor cost by job and service line back to your accounting system.
9. Mobile access for techs to see pay stubs, hours and commission detail.
10. Year-end forms, garnishments and new-hire reporting handled automatically.

Employer payroll taxes and benefits ride on every dollar of pay, including commission. Our guide to calculating labor burden shows how to include them when you price work.

Testing before you buy

1. 01

   Pick two real pay periods

   Choose your busiest week of last summer or winter and an ordinary week, with overtime, commission and on-call pay.

2. 02

   Run them in the trial

   Ask the vendor to run both pay periods in a demo account using your real time and commission data.

3. 03

   Compare line by line

   Check gross pay, overtime, taxes and net pay against what you paid, and investigate every difference.

4. 04

   Check the time flow

   Confirm that hours from the field app arrive by job, including drive time, without manual edits.

5. 05

   Check the reports

   Make sure you get labor cost by job and by service line for job costing.

6. 06

   Ask about support

   Who fixes an error on payday, and how fast? A missed or wrong paycheck costs trust with techs that is hard to rebuild.

Common mistakes

Paying commission in a separate check outside payroll is the most common mistake, because it skips both taxes and the overtime recalculation. The second is editing time by hand to remove drive time or shorten long days. The third is treating lead techs as salaried exempt employees because they supervise, without checking whether their duties meet the tests. The fourth is changing pay plans mid-season without written notice. Put every pay plan in writing, signed by the employee, with examples showing how pay is calculated in a normal week and an overtime week.

Pay transparency also matters more than it used to. Some states and cities require pay ranges in job postings; see our guide to pay transparency laws. For recurring-route businesses, per-stop pay interacts with route design; see revenue per route. Cleaning companies, where wages are the largest cost, should read our guide to cleaning business profit margins alongside this one.

Connecting payroll to the rest of the business

Payroll data should not stop at the paycheck. Labor cost by job feeds job costing; hours by tech feed efficiency and utilization reviews; overtime by week shows where you are short-staffed. Pick a system that exports cleanly to your accounting software, and decide whether commission is paid on invoiced or collected revenue and before or after card processing fees, as covered in our guide to credit card processing fees. Growing companies financing new vans or hires will also find that clean payroll records make lender reviews easier; see SBA loans and equipment financing.