Ask the Experts: Non-exempt Employees and Overtime

Question:

We are an employer in North Carolina.  Can we add hours to a 40 hour a week non-exempt employee’s hours by having her submit a 1099 for the additional hours per week (additional 4 hours)?  The additional hours would be paid for by a state government grant. If not, how can we pay her for those additional hours?

Answer:

We assume your company is subject to the Fair Labor Standards Act (FLSA) and our answer is based upon that assumption.  You can check your FLSA status by using the online help tool provided by the Department of Labor by clicking here: http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

Based on our assumption, this employee is a non-exempt hourly worker and is therefore entitled to overtime for any hours worked beyond 40 in a workweek. Regardless of the funding source paying her salary, the FLSA rules remain the same; because she is a regular employee in your organization and not an independent contractor, paying her for her work on the state grant as a 1099 worker is not recommended.  In cases like yours, when pay sources differ, the employer pays the employee for all hours worked at the rate of pay for the job and then if there is additional hours worked past 40 in the workweek, the employer would pay the overtime hours as outlined in the federal/state wage & hour rules.  You would then need to follow the grant’s accounting rules for posting those payments to the proper account.

Online Resource:

NC Wage & Hour Bureau: http://www.nclabor.com/wh/wh.htm