By: Jordan Schwartz
The holiday season is often the busiest time of the year for hospitality employers. At the same time, employees may appreciate the opportunity to earn more during these busy months. Consequently, there may be occasions when an employer places an employee in a dual capacity role. For example, from November through January, a hotel may permit (or require) a housekeeping attendant to also function as a front desk reservation assistant. While assigning (or permitting) an employee to work at another post with a different rate of pay is generally permissible and may be preferable to hiring additional employees for the holiday rush, there are complex “wage & hour” factors to consider prior to doing so.
The payment of wages is governed by the federal Fair Labor Standards Act (“FLSA”) and applicable state law. Under the FLSA, non-exempt employees must properly be compensated for all work performed, including overtime at a rate of one and one-half times their regular rate of pay for all hours worked in excess of 40 in a workweek.
Since overtime must be based on the employee’s “regular rate of pay,” calculating the overtime amount can be tricky when an employee works two or more jobs for which the employee is paid different rates of pay. Let us assume, first, that the housekeeping attendant position and the front desk reservation assistant position are both “non-exempt” positions. A common assumption in such a scenario is that the employee would receive overtime pay based on the rate of pay of the job at which he is working when he passes the 40-hour threshold. Absent a prior agreement between the employer and the employee, however, this assumption is false. Rather, according to the FLSA regulations, the employee’s regular rate of pay when he works two jobs is calculated as the weighted average of the different rates. Consequently, to determine the employee’s “regular rate of pay” in this scenario, his weekly earnings from his job as housekeeping attendant and his weekly earnings from his job as front desk reservation assistant are added together, and the total is then divided by the total number of hours worked at both jobs. The employee would then be entitled to 1.5 times this rate of pay for all hours worked over 40 in a workweek.
To complicate matters further, let us assume that the housekeeping position is exempt, while the front desk reservation assistant position is non-exempt. In this scenario, the key issue that must be addressed is how this employee should be classified, since an employee may have only one FLSA designation and cannot simultaneously be classified as both exempt and non-exempt.
According to the U.S. Department of Labor (“DOL”), to determine exempt status in such a scenario, the employee’s “primary duty” must be analyzed. The term “primary duty” means the principal, main, major or most important duty that the employee performs, with the major emphasis on the character of the employee’s job as a whole. Once this analysis is performed, the employer can appropriately determine whether the employee is exempt or non-exempt. If the combined duties would qualify the employee to remain in exempt status, there would be no requirement to pay the employee any additional salary above his normal weekly salary, although the employer could compensate the employee further for the additional work performed without compromising his exempt status.
If however, after analyzing the employee’s primary duty it was concluded that he was non-exempt, the employee would be eligible to receive overtime pay for all hours worked over 40 in a workweek. Once again, if overtime pay is required, absent a prior agreement otherwise, no attention should be paid as to which particular job the employee is performing when he crosses the 40-hour threshold. Rather, the employer will need to calculate the employee’s regular rate of pay as the weighted average of the different rates, and employee would then be entitled to 1.5 times this rate of pay for all hours worked over 40 in a workweek
As explained above, employers are not prohibited from—or required to—permit employees to work for more than one job for them, although in certain circumstances during the busy holiday season, doing do may be a prudent option for hospitality employers. It is crucial, however, to be cognizant of the “dual employment” wage and hour requirements of both the FLSA and applicable state law. Failure to abide by these requirements could remove all the cheer from the holiday season.