Posted by Tamara
An hourly Indiana employee works as a service technician and travels between each service call. His employer asks, “Can we pay the travel time separately and avoid overtime? Is it legal to pay less for paid travel time? If so, how is overtime calculated for employees being paid two different rates?”
Paid travel time, different pay rates and overtime can be confusing. There are several factors to consider:
Under the federal FLSA (Fair Labor Standards Act), an employee who puts in more than 40 hours in one week is entitled to overtime pay at 1.5 the usually hourly rate. Changing the way an employee is paid to avoid overtime is a violation of this law.
In most cases, federal regulations allow employers to pay a lower rate for travel time.
The definition for paid travel time is the time traveled between work sites and is considered as “all in a day’s work”. This time must be counted toward an employee’s total hours for the week.
An employee’s drive from home to the first work site and the drive from the last work site to home are not considered paid travel time, so do not figure into an employee’s pay.
Overtime for employees who are paid different rates is calculated using the employee’s average rate for the week.
Consider an electrician. He drives from home to the service warehouse every morning, picks up his list of service calls and makes them using a company vehicle. He is paid $20 per hour for his work and $10 hour for travel time. He works 25 hours and travels 25 hours for a total of 50 hours, entitling him to 10 hours of overtime.
To calculate his overtime, multiply his average rate for the week ($15) times 1.5. The electrician is entitled to an overtime rate of $22.50 per hour for that week.
Understand that different rules apply to assignments which occur outside the commuting range, and to those that require an overnight stay.
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