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Calculate OT correctly for employees who work two jobs

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in Leaders & Managers,People Management

Issue: How do you calculate overtime pay for employees who perform two separate jobs at separate hourly rates?

Benefit: New Labor Department rulings clarify this confusing part of wage-and-hour law.

Action: If your payroll includes dual-job employees, educate yourself on the following rules.

It can be difficult enough to calculate overtime pay for employees who work one job. But figuring overtime for those who work two different jobs for the same employer can be a nightmare. And mistakes can lead to complaints and lawsuits.

Now, the U.S. Labor Department has stepped in to clarify the issue, publishing two opinion letters based on employers' inquiries.

1. Calculating overtime based on two pay rates. The first opinion letter dealt with situations in which a nonexempt employee is paid two different hourly wages when he or she works at two separate jobs for the same employer during a workweek.

Typically, if employees work two different jobs with different hourly rates, federal wage law would require you to pay overtime based on a weighted average of the two hourly rates. But in this letter, Labor said employers can forgo the average and pay overtime based on the two separate hourly rates.

The letter made clear, however, that employers can't design this pay scheme as a way to shortchange employees or evade wage-law regulations.

2. Calculating overtime for hybrid exempt/nonexempt employees. The second opinion letter dealt with employees who work one exempt salary job and one nonexempt hourly job.

Labor said employees must be paid overtime based on their primary job. So, if the person's primary duty is his exempt, salaried work, the company wouldn't have to pay him any overtime pay (exempt employees aren't eligible for overtime).

However, it's a different story if the employee's primary duty is his nonexempt, hourly work. In that case, the company must add the overtime hours performed on both jobs and figure pay using the weighted-average techniques.

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