Q. An employee works for the company full-time, 7.5 hours per day, 5 days per week, at $20 per hour. To make ends meet, the employee also voluntarily works a different part-time job for the company on Saturdays, usually working an additional 7.5 hours at $15 per hour. The two jobs are completely separate and could just as easily be done by different people. Do we have to pay overtime for the additional hours, and if so how do we calculate the amount due?

A. Yes. Under the FLSA and parallel state laws, overtime is due whenever a non-exempt employee works more than 40 hours for an employer in a single 7-day workweek. It makes no difference that some portion of those hours are spent performing different duties than other hours.

That leaves the question of how to calculate overtime given that the employee is paid at two different pay rates for the different jobs. The employee is due time and a half, but at what rate? Here there are basically two options.

First, absent some other agreement with the employee, overtime is generally calculated using the weighted average of the employee's total pay. The math looks like this:

Job 1 - Straight Time

37.5 hours x $20/hour = $750

Job 2 - Straight Time

7.5 hours x $15/hour = $112.50

Overtime

Total hours: 45

Total Straight Time Pay: $$862.50

Weighted Average Rate = $862.50 ÷ 45 hours = $19.17/hour

Overtime rate = $19.17 ÷ 2 = $9.58/hour. 

Overtime pay = 5 hours x $9.72/hour = $48.60

Total Pay

$875 + $48.60 = $923.60

The other option, available under Section 7(g)(2) of the FLSA, is to reach an agreement or understanding with the employee that overtime pay for any hours in excess of 40 will be calculated using the straight-time pay rate for the work the employee is performing during the overtime hours. While this agreement can be oral, it would be prudent to get it in writing. In the scenario above, assuming that the Saturday hours fall at the end of the employer's established workweek, the calculation of overtime pay using this method would be as follows:

Straight Time: $862.50

Overtime Rate: $15.00/hour ÷ 2 = $7.50/hour

Overtime Pay: 5 hours x $7.50/hour = $37.50

Total Pay: $900

Obviously this results in a lower rate of pay in this situation, but that may not always be the case if the employee reaches 40 hours while performing work in the higher-paid position. For example, suppose that instead of a workweek beginning on Sunday or Monday, the employer's workweek begins on Saturday and ends Friday. In that case, the employee would reach 40 total hours on Friday, while working the $20/hour job, and the overtime pay due would be $50 instead of $37.50. 

Of course, if the goal is to avoid paying overtime altogether, the solution is to hire a second employee to perform the additional part-time job. While this may appear detrimental to the existing employee who simply wants to work some additional hours, remember that this is an intended consequence: part of the goal of the FLSA's overtime requirements is to encourage employers to limit work hours for individual employees and instead spread available work around.

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BIOGRAPHY

Bill Pokorny - partner at Franczke Radelet represents management in a wide range of labor and employment matters.  He concentrates his practice on litigation and counseling in areas including discrimination, disabilities, ERISA and employee benefits, employment contracts, covenants not to compete, wrongful discharge, wage and hour law, the Family and Medical Leave Act (FMLA), and labor relations.  He represents employers before state and federal courts as well as administrative agencies such as the Equal Employment Opportunity Commission and the Illinois Human Rights Commission.  Bill has experience in a wide variety of industries, including manufacturing; utilities; health care; insurance; financial services; staffing; retail; hospitality, including restaurants and hotels; nonprofit; education, including higher education; and local government.  Bill also has experience representing educational institutions in a variety of non-employment related litigation matters.

Bill joined the firm in February 2006.  Previously, he worked at the law firms of Wildman Harrold Allen & Dixon LLP (2003–2006) and McDermott Will & Emery LLP (2001–2003).  He is a member of the Chicago, Illinois State and American Bar Associations.

Bill is a co-author of the firm’s FMLA Insights Blog.  When he is not practicing law, Bill serves as a high school youth advisor and Board President at his church, and he is an avid cook and photographer.
William R. Pokorny
wrp@franczek.com
312.786.6141

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