An hourly employee who performs more than one job for the same employer may earn multiple pay rates. For example, a restaurant worker may make one hourly rate when working as a hostess, but another when working as a server.
For employers, multiple pay rates add another level of complexity to the payroll process—particularly once overtime becomes a factor. When running payroll manually, it’s important to keep track of every employee’s pay rate and number of hours worked (or paid) at each rate; and calculate the correct pay rates for the correct tasks performed.
Not all payroll service providers can accommodate employees with multiple pay rates. If you have employees who are subject to multiple pay rates, and are looking to outsource your payroll, be sure to ask your potential provider if their system is compatible with multiple pay rates for individual workers.