Q: Do I have to pay overtime to a nonexempt employee who is working two different jobs? If so, how do I calculate it?

A: According to the federal Fair Labor Standards Act (FLSA), employers must pay overtime to nonexempt employees for all hours worked over 40 in a single workweek, even if the employee is working two separate jobs for the same organization.

A common example is the employee who offers to provide custodial duties in the evening after his regular shift is over. The organization knows the individual and is confident that he will do a great job – plus the organization knows the employee needs additional income and this seems a great way to help both the organization and the employee.

However, this apparent win-win situation can create a huge problem if the employee’s pay is not calculated according to Department of Labor regulations.

Calculating 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, the employee’s regular rate of pay when he works two jobs (or more) 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 $7 per hour cutting the grass outside the plant ($70), is $595 divided by 45 hours, or $13.22 per hour.

35 hours x $15 + 10 hours x $7 = $525 / 45 hours = $13.22 (regular rate of pay)$525 (regular earnings) + 5hours x $6.61 ($6.61 is the premium rate for 5 hours of overtime – that base rate has already been included) This week’s pay would be $558.05.Thus, the overtime rate for this employee is one and one-half times $13.22, or $19.83 per hour, regardless of which job the employee performs during the extra hours. The employee’s regular and overtime rates will vary from week to week with the number of hours spent performing each job.

Thus, the overtime rate for this employee is one and one-half times $13.22, or $19.83 per hour, regardless of which job the employee performs during the extra hours. The employee’s regular and overtime rates will vary from week to week with the number of hours spent performing each job.Thus, the overtime rate for this employee is one and one-half times $13.22, or $19.83 per hour, regardless of which job the employee performs during the extra hours. The employee’s regular and overtime rates will vary from week to week with the number of hours spent performing each job.Alternatively, 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 (it is a good idea to memorialize this agreement with a signed document prior to having the work performed). 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 $7 per hour, the overtime rate for any additional hours spent cutting the grass is $10.50 per hour. Conversely, the overtime rate for any additional hours spent working as a machine operator is $22.50. This method of computation is available for hourly employees only and does not apply to nonexempt salaried employees.

A “red flag warning” – do not use the alternate method of calculating overtime unless you have a written agreement with the employee to pay the overtime premium on the rate of pay connected to the work done after 40 hours. A Plus Benefits will not calculate overtime using the alternate method unless a written agreement between the employee and employer is submitted with the payroll reports. A Plus will require new documentation (a new signed and dated agreement) for each week that the alternate method is used. If an organization is audited by the Department of Labor and claims to have used the alternate method of calculating overtime but does not have a written agreement for each week that the alternate method was used, the Department of Labor will require the organization to pay each employee affected back-pay along with some penalties and interest.

The overtime requirements, instituted in 1938 to prevent employers from taking advantage of employees, can turn what seems to be a “win-win” situation (allowing your employees to perform a necessary job and earn extra money) into a penalty for employers. As a result, some employers hire independent contractors to do these jobs (i.e. custodial work) at straight time rates instead of paying their own employees the overtime.

Beware – claiming that your employee was an independent contractor while performing additional work will surely result in fines and penalties if your organization is audited by the Department of Labor, be aware that the Department of Labor does not have a long term payment program - if an organization is found guilty of overtime violations the organization is generally expected to cut a check for any back-pay as well as interest, fines, and penalties within several days of the audit’s completion.

Our next HR Update will examine the subject of independent contractors and the hurdles that need to me cleared in order for a person to legally be an independent contractor.

Randall Barker is the VP of Human Resource for A Plus Benefits, Inc.

Read randall’s previous HR Update.

I continue to hear people mention how difficult it is to find employees in the current hiring environment. This seems particularly true when business owners feel they need compete with larger organizations like HP, Simplot, or Micron.

I was visiting with a friend this morning and we were talking about working with the big guys and he mentioned several things that caused me to think about the benefits associated with working for one of the little guys. Seriously, how many big company jobs allow an employee to work on two, three or more very different tasks on any given afternoon? How many big company opportunities include constant change and significant job flexibility? When I was working for Intel two years ago I spent my entire day boxed in a cubicle working on a very specific job. I had little interaction with co-workers unless it was over the phone and even less task flexibility. I was there to do a very finite job day in and day out.

It was this experience that convinced me that regardless of the health plans, stock options, and a good salary I wanted something different. Among other things, I wanted change, I wanted more responsibility and I wanted to feel like my contribution meant something. Fortunately I found that opportunity and by working for small businesses, so have many others. Small business owners can attract key talent by highlighting their flexibility when working with employees versus their much larger counterparts. Focus on the benefits of working in a smaller, more adaptable company and you’ll be in good shape.

Jake Lunt is the General Manager of Idaho operations for A Plus Benefits, Inc.

Many business owners are faced with the challenge of paying non-exempt employees for time while traveling. The laws requiring compensation for travel time under the Fair Labor Standards Act (FLSA) can be very confusing. The compensation an employee is eligible to receive depends on the mode of travel as well as when the travel takes place.

Employees are not eligible for compensation for the time spent traveling between home and work. This also means that employees who are away on business are not eligible for compensation for time spent traveling between a hotel and the worksite or home and the airport.

Any other travel done by employees for business purposes should be compensated as follows:

*Any travel time during normal working hours (between 8:30am-5:30pm on any day of the week) will be paid at the regular hourly rate and be subject to overtime.

*Any travel time spent as the driver of an automobile, regardless of whether the travel time is during normal working hours will be paid at the regular hourly rate and be subject to overtime.

*Travel time spent as the passenger in an automobile outside of normal working hours will be paid one-half (1/2) the regular hourly rate and this time will not be factored into overtime calculations.

For employees who choose a mode of transportation different from the one authorized (such as driving rather than flying) only the estimated travel time for the authorized mode of transportation is eligible for compensation.

For example, if a non-exempt employee chooses to drive rather than fly from Salt Lake City, UT to Boise, ID the employee will only be compensated for the one hour it would normally take to fly.

Some other rules to remember:

*If an employee is traveling between time zones, the point of departure should be used to determine whether or not the travel is during normal working hours.

*Travel time should be calculated by rounding up to the nearest quarter hour.

*Meal periods should be deducted from travel compensation.

*Employees are responsible for accurately tracking and reporting their travel time.

If you have non-exempt employees who are traveling for business, it is important to make sure you understand the laws and speak with your HR representative about exceptions. Please let us know if you have any questions regarding the compensation of your employees.

Samantha Bushard is an HR employee for the Idaho office of A Plus Benefits, Inc.

In previous blogs I have discussed some of the benefits of owning an HSA, but what are the benefits to employers for offering HSA qualifying health plans?

One benefit is lowering your healthcare costs as an employer. Most group health plans require the employer to make some contribution to employee premium amounts. The High Deductible Health Plans that qualify for HSAs generally have lower premiums. This gives the employer the opportunity to pay a part (or all) of the premium and contribute some money to the employee’s HSA for a lower overall cost than the premium on a traditional health plan.

HSAs can offer greater flexibility to your employees when it comes to controlling health care costs and can be a less expensive alternative for you as an employer. Offering flexible benefits options helps keep employees content and may assist in attracting and retaining quality employees.

It may be time to consider HSAs for you and your employees.

Samantha Bushard is an HR employee for the Idaho office of A Plus Benefits, Inc.

One of the best things about HSAs is their flexibility. As you may have read in previous blogs, HSAs are available to individuals on High Deductible Health Plans (HDHPs). This means that you can only contribute to your HSA pre-tax while you are on a HDHP.

But say for example you decide after a few years that you need a traditional health plan due to pregnancy, illness, etc. Once you change to a traditional plan you can no longer contribute to the HSA, but you can use the money in the HSA free of tax penalties as long as you continue to spend it on qualified medical expenses.

Additionally, the HSA is created in your name, so the account moves with you from employer to employer and as long as you are still on an HDHP you can continue to contribute pre-tax. HSAs offer you the freedom to change employers and health plans without losing any of your savings.

Samantha Bushard is an HR employee for the Idaho office of A Plus Benefits, Inc.