Human Resources mentor Robert Hoffman responds to the following question from an inc.com user:
We have a position in accounting that we have classified as an exempt position. The problem? The employee in this position wants to work her regular 40-hour week and get paid her salary; she also wants to work for another department for 2 to 4 hours a week and get paid hourly for this time. Can we do that? I need guidance from someone who knows.
Robert Hoffman's response:Your situation raises several important questions:
- Is the employee properly classified as "exempt" for purposes of the Fair Labor Standards Act (FLSA)?
- Are employees who perform exempt work eligible for overtime?
- If an employee works two jobs in one company, how should he or she be compensated?
First, let's review the FLSA. The FLSA requires time-and-a-half overtime compensation for all hours worked over a prescribed threshold (typically 40 hours per week) for nonexempt employees. All employees are presumed to be nonexempt unless their employer determines that they meet one of the FLSA's criteria for exemption. The burden of proof rests with the employer who asserts the exemption.
In your case, to determine the FLSA status of an employee, you must consider several criteria. The most important of these are salary level, job responsibility and complexity, and the autonomy and discretion inherent to the specific position.
It is important to realize that employees can be considered exempt from the FLSA's overtime pay provisions only if 50% or more of their time is spent in work of an exempt nature. Both the type of work that an employee performs and the amount of time devoted to performing that work should be considered when determining exempt status. Job descriptions, performance objectives, and company goals are one way to determine the proportional emphasis that should be given to specific job tasks. Generally, if less than 20% of an employee's responsibilities are of a nonexempt nature, he or she may likely be considered exempt and ineligible for overtime compensation. The company may elect to pay overtime to this type of employee, but it is not required by law to do so.
Overtime-exempt status is determined on a case-by-case basis. Some individuals may be exempt from overtime, while others with similar roles or job titles may not be. Each situation should be assessed individually. If a nonexempt employee performs exempt work less than 50% of the time, it may still be possible to be classified as nonexempt, then perform exempt work and be eligible for overtime. As you can see, these situations can be very confusing and hard to interpret! I strongly recommend that you consult the Department of Labor's FLSA Advisor for more detailed help in determining overtime status.
In the situation you describe -- assuming the employee is properly classified as exempt -- I believe you are not obligated to provide overtime compensation. You may choose to give the employee a bonus based on results achieved, not hours worked, as an alternative to overtime and as an additional motivator. Such a decision would be company policy on your part and not legally mandated.
However, if you determine that the employee is properly classified as nonexempt and eligible for overtime compensation and is working two jobs during the same workweek, overtime compensation (after 40 hours of work) can be calculated in two ways:
- Weighted average: The employee's total compensation for the two jobs is divided by the total number of hours worked. That figure is the weighted average regular rate, on which the overtime rate will be based.
- Rate of overtime: Before the work begins, an employee and employer can agree that the employee will be paid overtime compensation based on the rate of the job being performed during the overtime hours. This agreement should be in written form.
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