Overtime seems like an easy concept; the employee is entitled to 150% of their regular hourly pay for every hour of overtime they work. However, under the Fair Labor Standards Act (FLSA) there are special rules for employees who make different rates throughout the course of the week, and when those different jobs count as independent employment, versus when the work at both jobs must be counted towards the employee’s forty hours per-week. A typical situation where this arises is in a restaurant where an employee sometimes acts as a manager and sometimes as a server, in this case the hours worked as a manager and as a server may or may not need to be added together to determine if overtime is owed, it depends on how you have set up that employment arrangement on paper with the employee. On that note, if management and service is set up improperly, then if the employee makes more as a manager, than they do as a server, you cannot pay them overtime rates based on whether the overtime hours were as a manager or server, nor take the lower of the two numbers.  When an employee has a varying hourly rate, getting the overtime calculation wrong can lead to a very expensive Federal Fair Labor Standards Act (FLSA) suit. If you do not have a contract in place with a worker who does what you think are two separate jobs, a contract that is legally adequate to distinguish the jobs under the Fair Labor Standards Act (FLSA), then you can also face an expensive FLSA lawsuit. For help in avoiding expensive federal lawsuits when paying employees varying hourly rates call Attorney Joshua Sheskin at Lubell Rosen