Different Rates of Pay for Different Types of Work

messy stacks of hundred dollar bills to illustrate non-compliance fines and penalties

We were recently asked by a CEDR Solution Center member a very interesting, and complicated, question regarding hourly rates of pay. Because of how sticky this situation can become if it is not handled the proper way, we wanted to share our guidance with all our members.

The question was, “Can I pay my employees a different rate of pay for hours they spend in training?” And the answer is yes, though certain rules apply.

Employees who work in two different positions, or who perform two or more different types of tasks, may be paid different hourly rates during the same workweek. The most common case of this in a typical medical/dental office setting is when the employer establishes a Non-Production Rate of Pay, such as for meetings, trainings, or required travel. This is perfectly legal, as long as the rate of pay is above the minimum wage for your state, and the rate is agreed upon by both employer and employee, in writing, prior to the work being performed or when the event occurs.

It’s important to understand, however, that all hours worked for the same company, in all positions and at whichever rates apply, count toward the weekly total of hours for the purpose of determining overtime.

So how do you know which rate of pay to go by when determining overtime pay? Generally, when the employee receives different hourly rates of pay throughout the workweek, you determine the overtime premium, or “regular rate,” of pay by dividing the total compensation earned by the total number of  hours worked.  This produces a “weighted average,” or a blended rate.

Example:

Sylvia works as a hygienist about 38 hours a week, at an hourly rate of $25 per hour.  Sylvia’s Hygienist Employment Agreement (available from CEDR) states that she will be paid for non-production hours at the rate of $12 per hour.  Last week, she attended 8 hours of training, with 2 hours of compensatory travel, in addition to working a full schedule of 38 hours at her normal rate.

Her gross pay is calculated as follows:

WORK/HOURS MATH
Production/work: 38 hours x $25/hr = $950
Training/travel: 10 hours x $12/hr = $120
Total hours for the week: 48
Total straight time compensation: $1070
Blended hourly rate: $1070/48 = $22.29
Overtime premium (the “half” part of “time and a half”) $22.29/2 = $11.15
Gross Pay –>
Total straight time compensation + overtime premium pay
$1070 + (8 hrs x $11.15)
= $1070 + $89.16
= $1159.16

 

And that’s your Two-Minute Trainer for today! If you have any questions regarding the math we used above, or about adding a Hygienist Agreement to your practice, don’t hesitate to ask! You can contact us any time by phone at (866) 414-6056 or by email at solutioncenter@cedrsolutions.com.

Now, go have a productive, harmonious, and lawsuit-free day!

Jul 18, 2012

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.
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