Questions to Ask About Employee Pay for Multiple Jobs

When an employee expresses interest in working a second job inside your organisation, you’re likely to jump at the idea. After all, you already know all about their work ethic and likeability. On top of that, you’ll save time and money because you don’t have to commit to a hiring process.

However, payroll can become complicated quickly when you ask questions about how your established employee will be paid for their new role. You also have to consider how overtime will be calculated and whether or not exempt employees are affected differently.

These and other questions like them will be explored here. Whether you’re an employee, payroll professional, or management, you’ll need to either ask these questions or have a satisfactory answer to them to ensure everyone in the company stays happy and legally compliant.

Payroll specialist: compliance and fairness

When a manager forms an agreement with an employee that includes working in another sector, payroll has a big job to do. It isn’t as simple as paying an employee a different hourly rate because overtime, employee status, and state laws can change how their pay is calculated.

What are the laws in my U.S. state regarding pay for different roles?

Under the Federal Labor Standards Act, there are no specific laws regarding standard pay that aren’t included in the act at the time of writing. If an employee works for two roles but doesn’t exceed 40 hours a week, then they would be paid for both roles according to minimum wage laws and/or what's agreed upon by their employer and anti-discrimination law.

Overtime pay law is calculated based on state law as well, but all states have mandated extra compensation for employees who exceed 40 hours a week at 1.5 times their regular pay.

Alaska, Colorado, California, and Nevada follow the 40-hour rule and calculate overtime based on hours worked in a day. An employee who lives in this state will earn overtime if they work longer than 8 hours in a day, even if they don’t exceed the 40-hour workweek.

How is the overtime rate in the U.S. calculated for multiple jobs?

In regards to an employee working two jobs at different pay rates, the employee’s regular rate for the workweek is the weighted average of the two rates.

To calculate this, use this formula:

Total Weekly Compensation / Total Hours Worked = Average Wage Per Hour
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2

If the total weekly compensation is $800 and they worked 60 hours, then the average wage per hour would be $13.33. Divide that number by 2, and you get $6.66 as the overtime rate. Now add $6.66 for each overtime hour (20) for a total of $133.2. Add total overtime hours to their weekly compensation for a total of $933.2 for that workweek.

How do exempt employees or employers differ in overtime?

As of 2021, Employees are exempt from overtime in the U.S. if they meet the following criteria:

Earns at least $35,568 per year or $684 per week
Are classified as salaried employees
Performs job duties that are considered exempt

Although the Federal Labor Standards Act generally handles overtime, businesses that fall into the following criteria are instead covered by the Fair Labor Standards Act:

Health/Educational Businesses
Companies that earn $500,000 or more in gross annual sales
Businesses formed as an activity of the government
Enterprises that engage in interstate commerce

Some states will cover employees who aren’t protected by state law, while some state laws will ask you to refer to federal law as their state law. Kansas is an example of a state that provides overtime to employees for hours worked beyond 46 hours a week. If your workplace is not covered under the Fair Labor Standards Act, non-exempt employees must work 6 extra hours.

Employees: Research and Development Stage

Although employees should research answers to the same questions payroll specialists would ask, they should also consider questions that apply to themselves.

How much will my new role pay, and how can I research this?

Before you commit to a second job in your company, you need to determine if your role will pay you enough at the expense of your lack of free time. Remember that your new role will likely cause you to work evenings or weekends. However, if you feel your new role pays enough to make that sacrifice worth it, then you can start speaking to your coworkers about the position.

First, research the role online to understand what the competitive rate is for this position. Then, speak to a trusted coworker on what they receive for compensation, benefits, and hours. Finally, calculate both rates together and your overtime rate based on your state and federal laws.

How will I know if my position places me into the overtime rate?

Under the Fair Labor Standards Act, an employee who works for two or more related companies (joint employment) must collect overtime pay if their hours exceed 40 in a week. Employees who work for the same company but in a different role or building are also entitled to overtime.

There are exceptions to this rule, like if you’re an exempt or salary employee, but hourly employees must always receive overtime based on state and federal laws.

It’s common for employees to get lost in the split, so it’s important for you to pay attention to your paycheck and know your rights. If you witness the following, speak to your manager:

You’re receiving two separate paychecks that show you worked less than 40 hours, but your combined hours for both positions qualify you for overtime pay.
You’re receiving a combined check that exceeds 40 hours without overtime pay.
You did receive overtime pay, but it was miscalculated.
Your paycheck states you worked less than 40 hours when you worked more.

Most of the time, the mistake isn’t malicious as many automatic payroll clocks won’t combine hours for 2 positions or won’t calculate overtime hours correctly for separate pay scales.

Should I discuss a pay raise with my manager?

Absolutely. One of the main reasons you’re taking on this extra role is for compensation, and your manager is aware of this. The payment question won’t be inappropriate, but you should discuss this topic in a conversational way. If you already know how much this role pays from your research, ask if you could be compensated at a higher rate due to your experience.

You could also suggest an hourly rate instead of a salary, allowing you to earn overtime. Overtime alone could make the role worth it, even if the position pays less than expected.

Management: Scheduling and Commitment

Whether you’re an entrepreneur or a manager, your role is to oversee the operations of your company. You need to figure out how your employees' new role will affect your bottom line, your legal compliance and whether or not other departments can support you.

Can I use the same pay rate for both positions?

That entirely depends on the position your employee wishes to fill. If your office employee who makes $20 an hour wants to work in the warehouse, which pays $15 an hour, they’d likely be happy keeping their office rate. However, this rate is unfair to your other warehouse employees.

On the other hand, if your warehouse employees make $18 an hour, you could meet your office employee halfway and make both positions $19 an hour while working in their temporary role. This way, overtime will calculate the same for both positions. Always speak to your employees before adjusting their hourly wages to retain their trust and loyalty.

How can I schedule two separate roles without a payment conflict?

As mentioned, an employee is entitled to overtime if their clocked hours exceed 40 in a week regardless if they work in a different building or in a separate role. If your employee already works 40 hours a week but wants to pick up more shifts, they’ll always make overtime pay.

At the same time, onboarding a new employee for the same role can be more expensive if you factor in the cost of the hiring process and benefits. Even filling in for a temporary holiday or sick leave role can become costly if the candidate quits halfway through or doesn’t show up.

In the end, you need to consider your company's circumstances, your individual needs, and the employees' commitment to the role. It may be worth it to keep scheduling your employee overtime every week, especially if your payroll staff can keep your company legally compliant.

Should I outsource payroll for employees who work in different roles?

Before we answer this question, we need to break it down into smaller parts. If you don’t have a payroll department, the answer may be more evident than if you have one.

Does compliance cause you significant stress?

Staying legally compliant is a constant battle because a tried and true state payroll rule can change at the drop of a hat. If you have a startup with less than 10 employees, you can probably handle a bit of payroll, but as you grow, you won’t be able to spend the same amount of time keeping up with changing litigation. Eventually, you’ll need to hire a payroll specialist that has access to top payroll systems.

Are you short on time or experience?

Although entrepreneurs are expected to wear many hats, you also have to admit when something isn’t in your wheelhouse. You also have to decide whether payroll is worth your time regardless of your experience level. Managers can even suggest to the higher-ups to separate your role amongst other people or new hires so that you can focus on other matters.

Do you already have a payroll department that needs a bit of extra help?

You hired your payroll staff to handle basic payment duties in your company, but you found that they aren’t confident with employee pay for multiple jobs.

As the owner or manager, you can either outsource or suggest outsourcing a payroll department that can perform this role confidently. In the meantime, the new hire can teach your in-house staff how to perform their new duties without training them yourself. While both staff members are doing their jobs, you stay legally compliant as a result.

Final Thoughts

When your employee wants to discuss working extra shifts in another department, they likely want to earn more money to supplement funds lost during the pandemic. On the other hand, they may like to learn another skill that will benefit both you and the employee in the long term.

Regardless, you and your employees can use these answers to the most common questions relating to pay for multiple jobs to come to a conclusion that suits everyone. At the same time, you’re less likely to receive fines or penalties from the IRS if your payroll staff are aware of employment laws that affect how overtime is calculated within your U.S. state.

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