Most nail salons pay commission, often a 50/50 or 60/40 split on services. On a busy week it works out well for everyone. On a slow week, especially when a tech spends hours waiting for walk-ins, commission alone can fall below minimum wage. When that happens, the salon has to make up the difference.
This article explains how the rules generally work. It is not legal or tax advice. Minimum wage, tip credit and overtime rules vary by state and city. Before you change how you pay anyone, talk to a CPA or employment attorney who knows your state.
This article is part of our guide to paying nail techs as 1099 vs W2.
How the weekly check works
Under the federal Fair Labor Standards Act, commission is wages. It counts toward minimum wage, as long as the total covers every hour worked.
Federally, the check is done one workweek at a time:
- Add up what the tech earned that week from commission (and any hourly pay or bonuses).
- Add up every hour they worked, including time waiting between clients, cleaning and opening up.
- Divide pay by hours.
- If the result is below the minimum wage that applies to you, pay the difference.
Waiting time counts. A tech who's at the salon waiting for walk-ins is working, even with no client in the chair. On slow days, that waiting time is usually what pushes the hourly average under the minimum.
Use the highest minimum wage that applies. The federal minimum is $7.25 an hour, but many states and cities set higher rates, often $12 to $17. Your salon owes whichever is highest for where it operates.
Some states check more strictly. A few states, including California, don't let you average a strong day against a weak one in the same way. Check your state's rules.
A worked example
A tech works 40 hours in a week on a 50% commission and does $500 in services:
- Commission: 50% of $500 = $250
- Hours: 40
- Average: $250 ÷ 40 = $6.25 an hour
| Minimum wage where you are | Owed for 40 hours | Commission earned | Salon must add |
|---|---|---|---|
| $7.25 (federal) | $290 | $250 | $40 |
| $12.00 | $480 | $250 | $230 |
| $16.00 | $640 | $250 | $390 |
In a state with a high minimum wage, a slow week can cost the salon more than the commission itself. That's why many salons in those states pay an hourly base plus commission, or pay commission against an hourly minimum.
Do tips count?
Only with a valid tip credit. Federal law lets an employer pay a tipped employee a cash wage as low as $2.13 an hour and count tips toward the rest of the minimum wage. This is called a tip credit, and it comes with strict rules: the employee has to be told in advance, has to end up with at least the full minimum wage, and keeps all their tips.
Many states ban it. California, Washington, Oregon, Minnesota, Nevada, Alaska and Montana don't allow a tip credit, and others limit it. In those states, the full minimum wage has to come from the salon, and tips sit on top.
Tips always belong to the tech. Even where a tip credit is allowed, the salon can't keep any part of a tech's tips. (More in our guide to splitting tips between stylists.)
What about overtime?
Commission techs are usually owed overtime for hours over 40 in a week. Overtime is based on the regular rate, and commission is part of that rate.
Say a tech works 45 hours and earns $900 in commission:
- Regular rate: $900 ÷ 45 = $20 an hour
- Overtime premium: half the regular rate for each overtime hour = $10 × 5 = $50
- Total owed: $950
There's a narrow federal exemption for some retail and service businesses: if a tech's regular rate is more than one and a half times the minimum wage and more than half of their pay comes from commission, overtime may not be owed. Whether a salon qualifies depends on the details, so don't rely on it without checking with a CPA or attorney.
Other things that can push pay under the minimum
- Charging techs for supplies or tools. Deductions for polish, tools or uniforms can't bring a tech's pay below minimum wage.
- Unpaid "off the clock" time. Opening, closing, cleaning and required meetings are work hours.
- Paying late. The top-up is due on the regular payday for that week, not at the end of the month.
What about 1099 techs?
Minimum wage and overtime cover employees. A genuine independent contractor isn't covered. But most nail techs who work the salon's schedule, use its prices and supplies, and take walk-ins from its turn rotation are employees on the facts, whatever form they signed. If a "1099" tech is really an employee, these rules apply to them too, along with back pay. (See what happens if you misclassify a nail tech.)
How to stay on top of it
- Track hours for every employee tech, including waiting time, in your timekeeping or payroll system.
- Track commission and tips per tech, per week, separated into card and cash.
- Run the check every payroll. Divide each tech's pay by their hours and compare it to your minimum wage.
- Pay any top-up on the same payday.
- Keep the records. If a tech or the Department of Labor ever asks, you want to show the math for each week.
SupaDay handles step 2. Commission tracking calculates each tech's commission at checkout and records card and cash tips separately, and the commission report shows the totals for any week. Pair it with the hours from your timekeeping or payroll, and the weekly check takes a few minutes.
The bottom line
Commission counts toward minimum wage, but the salon guarantees the minimum. Each week, divide each tech's pay by their hours, compare it with the highest minimum wage that applies, and pay any shortfall on payday. Don't count tips unless your state allows a tip credit and you follow its rules, and remember that overtime is usually owed on top of commission. See how SupaDay tracks commission and tips for nail salons →
