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Employee Pay for Multiple Jobs

Pay for Employees Performing More than One Job Q&A

If you have employees who want to work additional jobs for extra pay, you need to make sure you are paying them properly. Nonexempt employees may be owed overtime, while exempt employees generally can be paid the extra compensation without affecting their exempt status.

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Q: We have several employees who have expressed interest in working second jobs in our organization to help out during the busy holiday season so they can earn extra compensation. How will this extra work affect their pay and will it affect nonexempt and exempt employees differently?

A: Generally, you can allow both exempt and nonexempt employees to work second jobs for extra compensation. But, you may have to pay overtime to the nonexempt employees and should watch how much time exempt employees spend on nonexempt duties to ensure their exempt status is not affected.

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Regarding nonexempt employees, if the employees work more than 40 hours in a single workweek performing two different jobs for your organization, they should be paid overtime for those hours over 40. Calculating the 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 $8 per hour cutting the grass outside the plant ($80), is $605 divided by 45 hours or $13.44 per hour. The overtime premium owed the employee is an additional $6.72 ($13.44 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 first 5 overtime hours up to 40 and is only entitled to the additional "half" of the time and one-half of overtime pay on the balance over 40.) Accordingly, the employee would be paid an additional $33.60 in overtime ($6.72 times 5 hours), so that the employee's total pay for the week would be $638.60 ($605 straight time pay plus $33.60 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 $8 per hour, the overtime rate for any additional hours spent cutting the grass is $12.00 per hour ($8 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.

Exempt employees do not have to be paid overtime for additional work hours, but when you provide exempt employees with extra compensation for performing additional job duties, two questions arise: (1) whether the exempt employee would be performing more nonexempt work than is consistent with her exempt status; and (2) whether she can still be considered paid on a “salary basis” under the FLSA if you pay her additional hourly compensation.

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Regarding the first issue, the FLSA salary basis test for white-collar exemptions requires that most exempt employees be paid a salary of at least $455 per week and that their “primary duty” must consist of the performance of exempt work. The FLSA regulations, found in 29 C.F.R. §541.700(b), indicate that employees who normally spend more than 50% of their time performing exempt work will satisfy the primary duty requirement. However, time alone is not the sole test, and employees who spend less than 50% of their time on exempt duties still may meet the primary duty standard if the other factors support the exemption.

Although these regulations focus on nonexempt work related to the exempt employee’s regular job, the same analysis can be applied when the employee works in a second, unrelated job. Thus, as long as the exempt employee devotes over 50% of all of her working time to exempt job duties she should continue to meet that exemption criterion.

The second issue raises the question of whether extra compensation paid in addition to the exempt employee’s salary will jeopardize the exempt status. The FLSA regulations define “salary basis” as payment on a weekly or less frequent basis of a predetermined amount constituting all or part of compensation, without reductions for variations in the quality or quantity of the work performed.

The regulations specifically allow employers to provide exempt employees extra compensation without jeopardizing the exemption or violating the salary basis requirement. According to the regulations, found in 29 C.F.R. §541.604(a), if the exempt employee is guaranteed a minimum weekly payment of at least $455, she also may be paid a commission on sales or a percentage of profits or sales, or even additional compensation based on hours worked beyond the normal workweek. This additional compensation can be paid on any basis, including a flat sum, bonus payment, straight-time hourly amount, time and one-half, or any other basis, including paid time-off.

Regards,

Robin Thomas, J.D.
Personnel Policy Service, Inc.

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3 Comments

  1. 3 Withheld InFear 11 Mar

    Most of the time when I speak to people (peers, family members, other business owners), and tell them what I do, they immediately blurt out "yeah.. they are taking advantage of you"... Stay until you find something else.

    So I am left with working here, or finding something else.  What Payscale.com does NOT do is tell a person how to account for the value he creates when he covers other job descriptions. As the mechanical drafter/designer, I kind find all kinds of information about the salary ranges and median for that job, but what about the IT work and intellectual property work? I'm not suggesting that I add up the combined median salaries of all 3 job functions and say, "that's what I want".. That would be ridiculous. For some reason however, I cannot get any kind of reasonable acknowledgement or salary increase for the extra functions.

    When a business owner creates a company policy that completely removes all reviews, period. No more reviews. No more yearly evaluations. How does one discuss the topic of salary? One is left up to his own sense of timing, I let four years go by without any mention of an increase or anything, and had to go in and justify and validate from scratch.. Sure I had examples of the other functions, sure I had values for salaries, taxes, and insurance for the positions that I was filling for "FREE" for the company, but it all went in one ear and out the other.

    This is where integrity comes into play from those you work for. You were right, the business owner has a "favorite" and he has experienced 3 promotions in my seventeen years of tenure. I cant even explain what my own job description is anymore, I don't know what my title is, I am like a Clarence Catch-all here, and in my hopes to do well first, I mistakenly attributed a measure of integrity in this business owner, of which he has none.

    The other day I was working on a very detail intensive design, where I have to keep several parameters on the top of my mind while designing this particular custom product. The business owner came in with an eight page document to scan for his college alumni meeting...

    No questions like "are you busy" or " do you have time to "... just HERE SCAN THIS AND EMAIL IT TO ME. This happens all the time, to the point that I think he does not do anything business related while he is here. Not for me to concern myself with, except the fact that these menial secretarial things dilute the overall value of my more serious, actual job related duties. Almost like it is a ploy to get me to not consider my overall work as important.

    Certainly is not important to him.

  2. 2 Periwinkle 11 Oct

    To Withheld:

    It sounds like you work for a cheapskate.

    I bet he has you come out to his house to mow his lawn too.  right now, you are trapped. Try not to let this lead you to slitting your wrists, as I know full well, the literal hell that working for someone like this can make in your life. Nickel and diming your way thru emergencies, racking up years worth of credit card debt to handle further emergencies, the sense of being "Denied" thru dismissal of your value, for nothing other than lack of integrity. This business owner, must have someone there to bounce his ideas off of, in order to support his own garbage; is there someone like that there? Someone who has experienced several promotions or pay raises over that period of time? Usually, owners lacking in integrity, seek to find an audience that will support their "story" about it, whether that story is truth, or a method to maintain a cheap salary structure for you. Either way, that owner does not have to face the fallout from his own bullsht policies. I would get out as fast as you can. Find something, anything, but staying there will have you finding yourself old, bitter, and without the lifestyle your obvious skills should bring. Shame on people with no shame, especially when they hold power over the earnings - thus - livelihood of others.

     

  3. 1 Withheld InFear 03 Oct

    I have worked for a company for 17 years as a mechanical design drafter. Eight years ago, the sole proprietor I work for saw that I had a knack for computers and asked me to "help out" in that area. I now, and called daily away from my desk to lend computer support (hardware, software, networking, disaster recovery, restoring failed harddrives, installation of motherboards on network server, etc.) I am the type of guy to prove myself capable first, and not immediately ask for more money. Since then, I have also been given the task of handling the design drafting for all production needs of our offices in 2 other countries. Some times it is very busy, sometimes not so much. The proprietor and his partner (who owns 2 other companies) dropped their intellectual property on my desk and asked me to learn, establish a method of, and ensure that all of the trademarks and patents in these 5 companies are paid and maintenance fees paid, filing proper declarations, applying for trademarks etc. I also provide a lot of graphic design services for our marketing and sales departments.

    So I have all these functions, do them very well, yet am paid at the "median" for nothing more than the level of a "mechanical drafter", and even here in this location, is still about 20% below that median.

    How do I properly establish a value for all of these functions? Should I just shut up and enjoy the fact that I have a job in this obama-failure of an economy?

     

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