Overtime Nighmare

Crout

Suppose ONE employee is doing two jobs. Job A is 28 hours a week at $10.50 an hour. Job B is 12 hours a week at $9.00. If the employee goes over 40 in a given week because of extra hours in one or both of the jobs, how in God's name do we calculate the overtime rate? (Please help. If I was good in math I wouldn't be in HR) Thank you kindly.

cebudragonlady

To get Gross Pay in these examples:

EE works 7 hrs in Job A, then 2 in Job B :
calculate: ( 10.50 x 7 )+ ( 9.00 x 1 )+ ( 9.00 x 1 x 1.5 )

EE works 9 hrs in Job A, then 2 in Job B :
calculate: ( 10.50 x 8)+ ( 10.50 x 1 x 1.5 ) + ( 9.00 x 2 x 1.5 )

EE works 5 hrs in Job B, then 3 in Job A, then 2 in Job B :
calculate: ( 9.00 x 5 )+ ( 10.50 x 3 )+ ( 9.00 x 2 x 1.5 )

EE works 8 hrs in Job B, then 5 hours in Job A :
calculate: ( 9.00 x 8 )+ ( 10.50 x 4 x 1.5 )+ ( 10.50 x 1 x 2.0 )

Hope this helps.

Chari

Jax

Might I suggest paying the average between the two rates; $9.75. That way you wouldn't have to worry about clocking the hours based on the type of work.

Hatchetman

For the FLSA basis in computing overtime for the two jobs, go to
the FLSA regulations (Code of Federal Regulations, volume 29, Section 778)

[url]http://www.access.gpo.gov/nara/cfr/waisidx_98/29cfr778_98.html[/url]


Take a look at 778.315, 778.400, 778.415, and 778.419.

Under the regs, there are a couple of ways of computing the overtime.

bsa

WHOA!!! Did I get lost for a minute. Dragonlady is giving an example for CA ... Crout, you're in PA aren't you? Unless PA requires overtime after 8 hours, you only have to worry about overtime after 40 hours. I don't "do" numbers and would have to seek help from accounting to calculate your scenario. Check the website that Hatchetman suggested.

Pork

I'm with bsa. Hire two part time employees and save the headache it is easier to handle two ees verses all the calculation! Better yet transfer the funtion to one department and now you have one full time employee with some overtime and full benefits. Ain't it great to be in HR where we don't have extra jobs and concerns!

Petard

An average rate for the two jobs makes the most sense if the employee agrees. If for some reason you can't do that, you'll have to sharpen your pencil.

I'll take a crack at it. As I understand the regs, you can do either of two things. (There may be more alternatives, but we'll leave it to you to wade through the code!)

Alternative #1 -- The "purest" method is the most difficult. You pay the appropriate respective rates (either $10.50 or $9.00 in your example) for all hours worked. Then you add up all the dollars paid and divide by the total number of hours worked during the week. That calculation produces the "regular rate," which is the basis for overtime pay.

Example: Employee works 30 hours at the $10.50 rate and 15 hours at the $9.00 rate. Total "straight-time" wages are (30 x $10.50) + (15 x $9.00) = $450.00 for 45 hours worked. The "regular rate," then, is $10.00 per hour. The overtime premium is one-half the regular rate, or $5.00 per hour for this particular week. The $450.00 would cover straight-time for all 45 hours worked, but you'd owe the half-time overtime premium for the overtime hours. The overtime due is $5.00 per hour for the five hours of overtime. Total wages for the week: $475.00.

The problem with Alternative #1 is that you have to perform new calculations each week in order to determine what the regular rate is (and thus what the overtime rate is). In other words, depending on the actual hours worked in the two jobs, the regular rate won't always be $10.00 per hour.

Alternative #2 -- If you get the employee's agreement ahead of time, you can circumvent the higher mathematics. Assuming the employee agrees beforehand (a dated signature would be nice), you can pay overtime at 1.5 times the appropriate hourly rate for each hour worked in excess of 40 during the week. If the employee works Job A during the first part of the week and then Job B during the second part, then obviously you'd rather pay overtime based on the $9.00 per hour rate. However, if the employee frequently works in excess of 28 hours doing Job A, he could reasonably seek to be paid at the respective overtime rate for hours in excess of his scheduled 28. He would feel cheated if he worked 32 hours in Job A and 12 hours in Job B but then got overtime pay based on the $9.00 rate.

Oops. Sorry, I didn't mean to go on so long. You did say nightmare, didn't you? You know, that blended rate is sounding better and better! While the straight average of $9.75 is reasonable, it might be more fair to offer a weighted average based on the schedule: [(28 x 10.50) + (12 x 9.00)]/40 = $10.05 per hour.