Answers to tricky legal questions: Exempt status when employee has 2 jobs
September 30, 2008 by Sam NarisiPosted in: FLSA, In this week's e-newsletter, Latest News & Views, Overtime
Our team of experts fields real-life, everyday questions from HR managers and gives practical answers that can be applied by any HR pro in the same situation. Today’s question: How do you figure out exemptions when an employee works two jobs at the same company?
Question: A full-time exempt employee recently started working a part-time job with us to pick up some extra cash. Is he still exempt?
Answer: That depends on the nature of his work. Employees are either exempt or nonexempt — they can’t be placed into two categories when they work two different types of jobs.
According to a Department of Labor Opinion Letter (FLSA 2005-14), the answer is based on the employee’s “primary duty.” In other words, if his main role is still performing exempt work, then he’s exempt across the board.
But if the primary duty is nonexempt work, then he gets overtime pay for hours worked in both jobs.
October 1st, 2008 at 11:41 am
Can the exempt employee still perform the part-time work and be paid at the regular rate for that job in addition to his salary? Or does he have to become a non-exempt employee and earn OT for the extra work?
October 1st, 2008 at 12:23 pm
This is in response to Martha’s questions. If the part-time work in an otherwise non-exempt job does not result in the employee’s primary duty becoming non-exempt activity (when both jobs are viewed as a whole), the additional work need not be paid at time and one-half. In other words, if the employee continues to qualify for exemption, how the second job is compensated is purely a matter for agreement between the parties (or the employer decides how it will be done). Paying time and one-half would not be required, nor would payment of time and one-half interfere with the exempt status of the employee.
This type of arrangement is not a problem if exemption is solid in the first place. If an employee is “borderline” as to exempt status, adding more non-exempt duties (as in the example) might push the overall job into a non-exempt category. In that case, all hours over 40 (regardless of whether it is the second job that causes the OT hours, or a combination of the two) are owed at time and one-half. Since two rates of pay or methods of pay are probably used, a weighted average approach would be required (half-time added to the regular wages, based on one-half of the weighted average rate after combining all regular wages for all hours of work, then dividing all hours of work into that combined sum).
October 1st, 2008 at 1:05 pm
I’d like to see a response to these replies…
At a previous employer, the non-exempt employee would receive a lump sum for the additional work being done, whether that work was “exempt” or “non-exempt.” The reasoning was that the additional work was outside the scope of the employee’s main position (which was exempt).
October 1st, 2008 at 1:21 pm
Martha - It goes back to the “primary duty clause.” The employee can’t make the determination to “go non-exempt.” It’s the FLSA guidelines which determine exempt or non-exempt status.
October 2nd, 2008 at 12:23 pm
Would it make more sense to pay on the part time job as an IC??
October 3rd, 2008 at 11:20 am
I agree with Larry. Regarding Tommy’s IC question, that will not work. FLSA definitions of “employ,” “employee,” and “employer” are so broad that many “IC” or other 1099 arrangements, such as “contract labor,” are erroneous if the employer assumes that overtime compensation is not required. When the worker is already an employee in the full-time job, an attempt to classify that person as an IC for the second job (with the same or a joint employer) will be viewed by DOL or the courts as an attempt to evade the FLSA.
If exemption continues to be clear, there is no reason to attempt such a tactic. If exemption is in doubt, the second job’s pay and hours should be combined with the full-time job’s pay and hours, then OT compensation should be correctly computed and paid.
November 18th, 2008 at 1:45 pm
Is there a limit on how many additional hours per pay period an exempt employee can work in a second non-exempt position for the same employer, to earn extra cash?