By Nancy Owen, PHR, Senior HR Consultant, East Coast Risk Management
For many companies, the holiday season is their busiest time of the year. Having the right number of employees to care for customers and clients can make or break a bottom line for the entire year. Due to this, many companies find themselves increasing their staff to accommodate the seasonal rise they experience in business.
We have been asked by many clients if they can offer part-time work to their regular full-time employees. It makes good business sense to do so. The employees are already trained and preforming well, so that means less ramp up time and less cost to the company. Employees often take on extra jobs over the holidays as well to assist with their financial responsibilities and most likely prefer to stay where they are comfortable, versus finding additional work in other companies. This scenario can be a win-win for everyone.
However, if this is something you are considering, there are a few things you should be aware of: pay discrimination and the loss of exemption-qualifying “primary duties.”
Pay/compensation discrimination occurs when employees performing substantially equal duties do not receive the same pay for their work. It is job content and not job titles that determine whether jobs are substantially equal. On the other hand, discrimination can occur due to sex or race, which are both prohibited under federal law.
The Department of Labor Wage and Hour Division’s function is to promote and to achieve compliance with labor standards to protect and enhance the welfare of the nation’s workforce. They enforce some of the nation’s most comprehensive federal labor laws which include minimum wage, overtime pay, record keeping, and child labor.
One of the laws enforced by Wage and Hour is the Fair Labor Standards Act (FLSA), which requires employers to pay covered non-exempt employees at least the federal minimum wage for all hours worked, and overtime pay for all hours worked over 40 in a work week.
Under the Fair Labor Standards Act (FLSA), employers have two kinds of employees: exempt and non-exempt. Exempt employees are those who satisfy the FLSA’s salary basis test and either the executive, administrative or professional duties test. Exempt employees do not need to be paid overtime if they work in excess of 40 hours in a week. All others are considered non-exempt and must be paid 1.5 times their hourly rate for hours worked in excess of 40.
If an employee is non-exempt (not exempt from overtime) an employer must pay all hours even if the employee is working different jobs for the same employer and even if the job assignments are unrelated.
When a non-exempt employee… takes a second job that is exempt, the employee must be compensated at a time-and-one-half overtime rate for any hours worked over 40. This situation is treated as if the second position was non-exempt rather than exempt.
When an exempt employee… takes a second job that is non-exempt, the hours worked at the second job are paid at the regular straight-time rate for that job. If the employee spends as much or more time in a second non-exempt job as he or she does in the original exempt position this could change the exempt status for that employee. If they work less time in the second job then the mail exempt salaried job then the employee’s primary duty is exempt when taking into consideration additional duties, they maintain the exempt status even if receiving additional pay. Caution is advised when considering an exempt employee to perform a secondary job that is non-exempt as this would likely be scrutinized by Wage and Hour.
When an exempt employee takes a second job that is also exempt, the employee will earn two separate salaries without any additional compensation regardless of how much time the employee spends in either position.
There is a one exception to the second job rule.
When a local government employee… works a second, unrelated job for the same employer on a part-time basis only occasionally or sporadically, the hours worked in the second job do not have to be counted for the purpose of overtime but may be paid at a straight time rate.
The terms “occasional” and “sporadic” mean infrequent, irregular, or occurring in scattered instances. The work may be recurring… for example, every year around the holiday, but it cannot be regular. If an employee does such work repeatedly, however, the job will lose its occasional and sporadic status and be subject to overtime as a second job with the same employer.
Joint employment is where the employee performs work which simultaneously benefits two or more employers or works for two or more employers at different times during the work week.
A joint employment relationship generally is considered to exist in situations such as when:
- There is an arrangement between the employers to share the employee’s services, for example, to exchange workers.
- One employer is acting directly or indirectly in the interest of the other employer in relation to the employee.
In this case, this isn’t really a legal issue. It’s up to the company as to which department or joint company pays which portion of the monies.
Lastly, we are often asked the question if an employee can waive their rights to Overtime.
… and the answer is no. The U.S. Supreme Court held that employers and employees could not agree to terms of payment that violate the FLSA.
Overtime for such second jobs may be calculated on a weighted average of the two rates; or if the employer and employee have an agreement prior to the overtime being worked, the overtime may be paid based on the regular rate of the job where there the employee performs overtime. [See the Wage and Hour Fact Sheet on Overtime for more information on calculations. http://www.dol.gov/whd/regs/compliance/whdfs23.pdf.]
If you are an employer with questions about this or any issue relating to safety, human resources or workers’ compensation, contact East Coast Risk Management by calling 724-864-8745 or emailing us at firstname.lastname@example.org.
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