Do you have employees working on different contracts during the same week? If so, you must make sure you add up their total number of hours and pay overtime for the hours in excess of 40 per week.
You can’t issue separate paychecks for each contract and avoid overtime payments. The Fair Labor Standards Act () clearly states that all hours worked “for a particular employer” count for overtime, even if the work is done on different projects or contracts.
Recent case: Tomcat Electrical Security employed James Brown and his co-workers. The company paid different hourly rates when its employees worked on different projects, and the payroll department routinely calculated their pay by the project and the contract they worked on.
The problem was that the employees worked far in excess of 40 hours per week without being paid overtime. Here’s how it happened: Payroll didn’t add up the total number of hours worked per week, but instead counted the hours by the contract. In effect, it looked as though the employees didn’t work overtime because they didn’t work more than 40 hours on any one contract or project.
They sued, and the federal court considering their class-action case ordered a trial. It reasoned that theprovisions apply to all hours worked for “a particular employer.” While an employee working two jobs for different employers doesn’t get overtime by adding the two together to meet the 40-hour threshold, an employee working on two contracts for one employer does. (Brown, et al., v. Tomcat Electrical, No. 03-CV-5175, ED NY, 2007)