Under the FLSA, an employer may pay the same employee different rates for different types of work as long as the employee’s regular rate of pay is at least the minimum wage. As in all circumstances, an employer may not manipulate rates or payment methods for the purpose of avoiding its obligation to pay overtime compensation. For example, it is not permissible to pay a lower rate for all hours over 40 in a workweek or for all hours in a workweek in which the employee works more than 40 hours.
If an employee receives different rates of pay for work in a single workweek, the employee’s “regular rate” for that week is the weighted average of such rates (or “blended rate”). That is, each workweek, the earnings from all hourly rates are added together and the sum is then divided by the total number of hours worked at all jobs for the same employer, and the overtime pay due is one-half of that result times the number of hours worked over 40.
For example, assume an employee of a home care agency is paid $10.00 per hour for time spent providing care and $8.00 per hour for travel time. In a particular workweek, the employee worked 45 hours providing care and 5 hours traveling. The calculations for computing the overtime compensation due in this workweek using the weighted average are as follows:
($10.00 × 45 hours) + ($8.00 × 5 hours) = $490.00 of straight time pay
$490.00 ÷ 50 total hours = $9.80 is the weighted average (regular rate)
50 total hours – 40 hours = 10 overtime hours worked
$9.80 × .5 × 10 overtime hours = $49.00 in overtime compensation
$490.00 + $49.00 = $539.00 is the total amount due
Alternatively, an employer may calculate the overtime obligation based on the rate for the particular task(s) performed during the hours over 40 in the workweek (i.e., the “rate in effect” or “applicable rate”), but only if there is an agreement or understanding with the employee (made in advance of the performance of work), the hourly rate(s) upon which the overtime is computed are at least the Federal minimum wage, and the hourly rate(s) are actually paid for such work when performed during non-overtime hours.
Using the scenario above, assume the employee’s 10 hours of overtime consisted of 7 hours of providing care and 3 hours of travel. The calculations for paying overtime based on the rate in effect are as follows:
($10.00 × 45 hours) + ($8.00 × 5 hours) = $490.00 of straight time pay
$10.00 × .5 × 7 hours = $35.00 in overtime compensation for hours of care services over 40 total hours in the workweek
$8.00 × .5 × 3 hours = $12.00 in overtime compensation for hours of travel time over 40 total hours in the workweek
$35.00 + $12.00 = $47.00 total overtime compensation due
$490.00 + $47.00 = $537.00 is the total amount due
October 2018
Tags: FLSA Compliance
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