A client of mine recently had an issue with an employee who was working two different jobs (at different rates), and was facing a dispute over how overtime should be calculated. Lucky for them, their handbook had the language required by the Department of Labor to use the more "employer friendly" method of calcualation – the rate in effect at the time the overtime was worked.
Imagine a situation where an employee making $25.00 per hour wants to help out with a cleanup on the weekend. You agree to pay him or her a reduced rate of $10.00 per hour for the work, which is the same rate you pay everyone who helps with the extra work (which is overtime assuming the employee has already worked 40 hours during the week). Is the employee's overtime rate $15 dollars (time and one half the $10.00 rate) or do you look at the weighted average for the entire week to get the employee's regular rate, and then multiply that number by time and one half? If you don't have a clear policy, DOL will likely say you must do the latter.
The takeaway from this example is that you should consider a policy which states that employees working overtime will be paid based on the rate for the job they are working while performing overtime. This will almost always benefit the employer, and create a more just result. One word of caution is that the agreed overtime rate in effect must be a bonafide rate. In other words, in the example above, you must pay the employee the same pay rate for the clean up work as other employees. You cannot use an artificial or bogus rate to avoid paying overtime.
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