Question

We would like to offer one of our employees a second job at our facility this summer, landscaping the grounds around the office. He apparently has a business doing this on weekends and he proposed the idea to us. Since they are two separate jobs, we plan to pay him at two separate hourly rates. He currently works with us as a forklift operator in the warehouse working 40 hours a week at a rate of $25 an hour. Because the landscaping job is a second job outside of his regular schedule, and less demanding than the forklift operator job, we have established an hourly rate of $18 an hour. We estimate that he will work approximately eight to nine hours a week after work. We also thought would be a good idea to ask him to sign an agreement affirming that this is the arrangement we have established for the summer. Is there anything we have forgotten in making this arrangement? And does AIM have a model document we could use to put this agreement in writing?

Answer

Having a non-exempt employee work two different jobs for you at the same time is more complicated than you might think. To do so in the way you described is illegal under both federal and state law. Your proposal brings us to the “blended rate provision.”

The Fair Labor Standards Act (FLSA) regulation numbered §778.115, available here, addresses this question directly. Get out your calculator to help determine what the blended rate is as we go through this process.

The regulation provides that “Where an employee in a single workweek works at two or more different types of work (i.e., forklift operator and landscaper) for which different non-overtime rates of pay have been established (i.e. $25 an hour and $18 an hour), the employee’s regular rate for that week is the weighted average of such (pay) rates. That is, an employee’s total earnings (minus any required deductions) are computed to include the employee’s compensation during the workweek from all such rates and are then divided by the total number of hours worked at all jobs and multiplied by time and ½ if it involves overtime hours. An example will help illustrate this:

An employee works 40 hours a week at $25 per hour and thus earns $1,000 (40 times $25) per week. Assuming the employee works nine hours a week in the landscaping job at $18 an hour, the amount is $162 yielding a weekly total of $1,162 a week. The $1,162 a week must be divided by 49 hours a week yielding a blended rate of $23.71. An employer must then pay the employee 1.5 times the blended rate (23.71×1.5) for every hour worked beyond 40 in the week or in this case $320.08 in overtime pay each week.

So, while the regular hours at his principal job as a forklift operator can be paid at the $25 rate you have proposed, all the time spent at the second job in the scenario you described, is overtime and must be paid based on the blended rate formula described above.

There are other factors still to be considered. The employee may work overtime in the regular job for which the employee must be paid before beginning the work on the landscaping job. That new amount would impact the original calculation above, increasing the blended rate by some yet-to-be determined amount.

Another factor: According to the Massachusetts wage-and-hour law, M.G.L. c. 149 §148, “No person shall by a special contract with an employee or by any other means exempt himself from this section or section one hundred and fifty.” Any written agreement that you drafted and the employee signed would appear to be seeking to avoid overtime payments and would likely fail under Massachusetts wage law thereby exposing you to treble damages if the employee were to complain to the Attorney General’s Fair Labor Division about it.

AIM members interested in this issue or other human resources topics may contact the AIM HR Helpline at 1-800-470-6277.