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Overtime Pay for Two Different Jobs Q&A

If a nonexempt employee works two jobs for your organization, you most
likely have an overtime obligation for all hours over 40 per week. Find
out how to calculate the employee's pay in these situations.
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Q: Do we have to pay overtime to a nonexempt employee who is
working two different jobs? If so, how do we 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.

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, according to the FLSA regulations found at 29 C.F.R.
§778.115, 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. The overtime premium
owed the employee is an additional $6.61 ($13.22 divided by 2) for each
hour over 40, regardless of which job the employee performs during the
extra hours. (The employee in the example has already been paid
straight time for the 5 overtime hours and is only entitled to the additional
"half" of the time and one-half of overtime pay.) Accordingly, the
employee would be paid an additional $33.05 in overtime ($6.61 times 5
hours), so that the employee's total pay for the week would be $628.05
($595 straight time pay plus $33.05 overtime premium). The employee's
regular and overtime rates may vary from week to week with the number
of hours spent performing each job.

Alternatively, as explained in the FLSA regulations at 29 C.F.R.
§778.419(a), 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 ($7 times 1.5). Conversely, the
overtime rate for any additional hours spent working as a machine
operator is $22.50 ($15 times 1.5). 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.

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Subscribers to the Personnel Policy Manual and HR Policy Answers on
CD can find more information on the calculating overtime in Pay Procedures,
Chapter 305, note 15.

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