Paying Commission in a Traffic Control Company: On Invoiced or Collected Revenue

Commission is one of the few pay decisions that changes how people behave on the job. A salesperson paid on invoiced revenue chases signatures. One paid on collected revenue chases payments. A crew lead paid on job revenue notices when a closure grows by twenty drums and nobody wrote it on the ticket. Each of those behaviors helps the company, but only if the plan is designed for the one you want.

This post covers the design choices for a commission plan in a traffic control company: which revenue number to use, how to handle sales tax and bad debt, and the federal rules on overtime and withholding that apply whatever you choose. It is general information, not legal or tax advice. State wage laws differ, and a short review by an employment lawyer or payroll professional before you roll a plan out is cheap compared with fixing one after.

Decide what you are paying for

Start with the behavior, not the percentage.

• Salespeople and estimators win new customers and new jobs. Their commission usually rides on the revenue from accounts or jobs they brought in.
• Account managers keep existing customers buying. Their commission may ride on revenue from a set of accounts.
• Crew leads and drivers run the work. A commission here rewards complete tickets, efficient setups and fewer callbacks, and it has to be designed so it never rewards rushing a setup.

Write down who earns on which revenue. Two people paid on the same job is fine, as long as everyone knows it in advance.

Three numbers that look alike and are not

The same job produces three different revenue figures over its life:

1. Invoiced revenue: the amount on invoices you have issued, whether or not the customer has paid.
2. Collected revenue: the amount the customer has actually paid.
3. Pre-tax revenue: either of the above with sales tax taken out.

The plan has to name one of them, and the payout date has to follow from it.

Paying on invoiced revenue

Paying on invoiced revenue is simple: the job is done, the invoice goes out, the commission is earned. People see the reward soon after the work, and nobody waits on a slow-paying general contractor.

The cost is that you pay on money you may never receive. A disputed ticket, a customer that goes under, or an invoice you later void all leave a commission already paid on revenue that did not arrive. If you choose this basis, you need clawback rules, covered below.

Paying on collected revenue

Paying on collected revenue ties the reward to cash. Nobody is paid on a bad debt, and the person earning the commission has a reason to help collect.

The cost is delay. Public work often pays slowly, and retainage can hold part of a contract for months. Our post on retainage and cash flow covers how long that can run. A salesperson who brings in a large public job may wait a long time for the commission, which can push them toward smaller, faster-paying work. Some companies split the difference: part on invoice, the rest on collection.

Always figure it before tax

Sales tax is not revenue you earned. You collect it and pass it on. Figuring commission on the tax-inclusive total pays people on money that goes to the state, and it makes the same job worth more in a county with a higher rate. Use the pre-tax amount.

Decide the same way about other pass-through charges. If you bill something at cost, such as an outside service you arrange for the customer, say in the plan whether it counts.

Revenue or margin

Revenue is easy to measure and easy to game: a salesperson can win work by pricing it too low. Paying on gross margin (revenue minus the direct cost of the job) rewards profitable work instead. The catch is that margin needs reliable job costing, and a plan built on a number nobody trusts causes more arguments than it settles. Our post on job costing covers what that takes. If your job costs are not solid yet, start on revenue and move to margin later.

Clawbacks and bad debt

If you pay on invoiced revenue, decide in writing what happens when the money does not arrive:

• What triggers a clawback: a voided invoice, a credit to the customer, or an invoice written off as uncollectible after a set number of days.
• How long the window runs: a clawback that can reach back years is hard to administer and hard to defend.
• How it is recovered: usually as an offset against future commission, rather than a deduction from base pay.
• What happens when someone leaves: whether unearned or clawed-back amounts are settled at the end, and how.

Recovering money from an employee's pay is where state law matters most. The Department of Labor keeps a guide to state labor laws with links to each state's labor office. Check your state's rules on deductions, and get the employee's signature on the plan, before the first clawback.

The federal rules you cannot design around

Commissions count toward overtime for non-exempt employees. Under 29 CFR 778.117, commissions are payments for hours worked and must be included in the regular rate, whatever formula the commission is based on and even when it is paid after the normal payday. If your crew leads and drivers are non-exempt employees, their commission belongs in the overtime calculation. When a commission is figured after the pay period ends, 29 CFR 778.119 describes how to pay overtime first on the base rate and then pay the extra overtime once the commission is known, apportioned back over the weeks in which it was earned. Our post on overtime and FLSA basics covers the regular rate in more detail.

Commissions are supplemental wages for withholding. IRS Publication 15 (2026) lists commissions among supplemental wages and explains the withholding methods for them. It states that the withholding rate on supplemental wages remains 22%, or 37% for supplemental wages over $1 million paid to one employee in a calendar year, and sets out when the optional flat rate may be used.

Crew-lead commission without rewarding speed

A crew-lead commission tied to job revenue can push people to rush setups and teardowns. Tie it to things the crew lead controls that also make the job safer and easier to bill: a complete, signed daily ticket, a setup that matches the plan, devices counted out and back. Do not make it depend on nobody reporting an injury. A bonus that disappears when someone reports a minor injury gives the whole crew a reason to stay quiet. Our post on safety incentive programs covers what OSHA has said about incentives and reporting.

When several people work one job, decide how the revenue is shared. An even split is simple and easy to explain.

Write the plan down

A one-page plan prevents most disputes. It should name:

• who is eligible and on which revenue,
• the basis (invoiced, collected, or split) and whether it is pre-tax,
• the percentage or schedule,
• when commission is figured and paid,
• clawback triggers, window and method,
• what happens on termination, and
• how disputes are raised and settled.

Have each person sign it, and keep a copy with their payroll records.

What the Traffic OS commission report does

Traffic OS includes a commission report among its reports. For jobs completed in the period you choose, it takes the pre-tax total of each job's invoices and leaves out voided invoices. It splits that revenue evenly among the people assigned to the job, then applies a default commission percentage set in Settings, or a per-person override. The report prints to PDF.

Two limits to know:

• It is an invoiced figure. It does not track collections or calculate clawbacks. If your plan pays on collected revenue, use the payments and A/R aging reports to see what has been paid.
• It credits the people assigned to the job. It does not track which salesperson sold a job. For a sales commission, use the sales-by-customer report together with your own list of which accounts belong to which salesperson.

The percentage you set in Traffic OS does not make a plan. The written plan does. The report saves the arithmetic once the plan is decided.