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Q: Do I
have to pay overtime to a nonexempt employee who is working two
different jobs? If so, how do I calculate it?
A: According to the federal
Fair Labor Standards Act (FLSA), employers must pay overtime to
nonexempt employees for all hours worked over 40 in a single
workweek, even if the employee is working two separate jobs at the
same organization.
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Calculating overtime can be a
little tricky when an employee works two or more jobs for which the
employee is paid different hourly rates since overtime must be based
on the employee’s "regular rate of pay." Typically, the employee’s
regular rate of pay when he works two jobs is calculated as the
weighted average of the different rates. For example, the regular
rate of an employee who works 35 hours per week at $15 per hour as a
machine operator ($525), and works 10 hours that same week at $7 per
hour cutting the grass outside the plant ($70), is $595 divided by
45 hours, or $13.22 per hour. Thus, the overtime rate for this
employee is one and one-half times $13.22, or $19.83 per hour,
regardless of which job the employee performs during the extra
hours. The employee’s regular and overtime rates will vary from week
to week with the number of hours spent performing each job.
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Alternatively, an employer and
employee may agree, before the work is performed, that the overtime
rate will be based on the regular rate that applies to the type of
work performed during the hours in excess of forty. Therefore, if an
employee spends 35 hours in a week working as a machine operator at
$15 per hour, and five hours a week cutting the grass at $7 per
hour, the overtime rate for any additional hours spent cutting the
grass is $10.50 per hour. Conversely, the overtime rate for any
additional hours spent working as a machine operator is $22.50. This
method of computation is available for hourly employees only and
does not apply to nonexempt salaried employees.
These overtime requirements,
instituted in 1938 to prevent employers from taking advantage of
employees, can turn what seems to be a "win-win" situation (allowing
your employees to perform a necessary job and earn extra money) into
a penalty for employers. As a result, some employers hire
independent contractors to do these jobs at straight time rates
instead of paying their own employees the overtime. |
Personnel
Policy Service, Inc.
