Say you're about to bring on a second tech and you're deciding how to pay them. Hourly feels safe, but it pays the same whether the job takes 40 minutes or 90, so your fastest tech earns no more than your slowest one. Commission ties pay to what they bring in, but a slow week on the schedule becomes a slow paycheck too, through no fault of the tech. Flat-rate or piece pay ties the paycheck to the job itself.
Each method changes how a tech works, and each one still has to clear the same federal wage floor. Pay a tech on commission or piece rate and you still owe at least the minimum wage for every hour worked, and overtime past 40 hours in a week, unless a specific, narrow exception applies.
This guide covers the three pay methods, the tradeoffs between them, and what federal law requires once you pick one. The federal rules are a floor. States can and do set higher minimum wages and additional overtime rules, so check your own state labor agency before you change how anyone gets paid.
Three ways to pay a tech
Hourly pay is a fixed rate per hour worked, regardless of how much revenue the tech brings in. It's simple to run and easy for a tech to understand, but it rewards time on the clock, not output.
Commission pay ties some or all of a tech's earnings to the revenue they generate, often a percentage of the ticket on jobs they close or complete. It rewards selling and finishing work, but a tech's income swings with the schedule and with how many jobs turn into paid work.
Piece rate, also called flat-rate pay in the trades, pays a set amount per task completed, drawn from your price book, no matter how long that task takes that tech. A tech who gets faster earns more per hour; a tech who's slower on a given task earns less, on that task, than the time they put in.
The tradeoffs
| Method | What it rewards | Tech's income risk | What you track |
|---|---|---|---|
| Hourly | Time on the clock | Low: pay is the same regardless of job pace | Hours worked |
| Commission | Revenue generated | High: income follows job volume and ticket size | Revenue per tech |
| Piece rate / flat rate | Jobs completed, at the book price | Medium: income follows speed and task mix, not the full schedule | Tasks completed, hours worked |
A callback cuts into piece-rate pay in a way it doesn't for hourly: if a warranty callback doesn't pay the tech again, a tech on piece rate feels that lost task directly. The guide to tracking and pricing callbacks covers how to handle that fairly.
The pay method doesn't skip minimum wage or overtime
The Fair Labor Standards Act, the federal wage and hour law, doesn't care how you structure pay. It still requires at least the federal minimum wage for every hour a covered employee works, plus overtime for hours over 40 in a workweek. That federal minimum wage is $7.25 an hour, according to the Department of Labor's Wage and Hour Division, and has been since July 2009. Many states set a higher minimum wage, and where a state rate beats the federal one, the employer has to pay the higher number.
For a tech paid by piece rate or commission instead of an hourly wage, the Wage and Hour Division explains that overtime still has to be worked out from an hourly figure: divide the tech's total pay for the workweek by the total hours they worked, and that gives a regular rate. Overtime hours, the hours over 40 in that workweek, are then owed at one and a half times that regular rate, on top of what the piece rate or commission already paid for the job itself.
Commission pay has one more wrinkle: a shop can treat a commissioned employee as exempt from overtime under FLSA Section 7(i), but only if three conditions are all true at once, per the Wage and Hour Division's guidance. The shop has to qualify as a retail or service establishment. The tech's regular rate has to come out to more than one and a half times the applicable minimum wage for every hour worked in any week with overtime hours. And over a representative period the shop picks, from one month up to a year, more than half the tech's total earnings have to come from commissions. Miss any one of the three and the exemption doesn't apply, so overtime is owed as usual for hours over 40.
State rules differ
The federal rules above set a floor, not the whole picture. State minimum wage and overtime law can require more than the FLSA does, and the Department of Labor's own minimum wage page is explicit that where state law gives more protection, the employer has to follow both the state and the federal rule. Check your state's labor department before you set up piece-rate or commission pay, since the federal 7(i) exemption and the federal piece-rate math are the national floor, not a guarantee that your state allows the same thing on the same terms.
What techs in these trades typically earn
If you're setting an hourly rate, a commission split, or a piece price and want a market check, the federal Bureau of Labor Statistics tracks median pay by occupation. As of May 2025, the median wage was $29.33 an hour for heating, air conditioning, and refrigeration mechanics and installers, $30.67 an hour for plumbers, pipefitters, and steamfitters, and $30.38 an hour for electricians. Those are national medians across every kind of employer, not a number tuned to your market or your shop's margin, so treat them as a reference point rather than a target to hit exactly.
Picking a method
None of the three methods is right for every shop. Hourly is the simplest starting point for a new hire still learning the trade. Piece rate rewards an experienced tech who's fast and accurate, and it lines up pay with the same price book the shop quotes customers from. Commission fits a role built around selling add-on work, like a maintenance agreement or a system replacement, more than it fits routine service calls.
Whichever method you run, the burdened labor rate guide is still the number to check your pay structure against: what a tech costs you, fully loaded, has to stay under what the job brings in, regardless of whether the tech is paid by the hour, the task, or the ticket.