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Item Number: H.5. CITY COUNCIL REPORT SUBJECT: Approval of a new Employee Handbook policy establishing a standardized method for calculating overtime using a weighted average rate of pay for non-exempt employees working multiple positions at different pay rates within the same workweek, in compliance with the Fair Labor Standards Act (FLSA). MEETING DATE: April 28, 2026 TO: Mayor and Council FROM: Wendy Jackson, Deputy City Manager/Employee Resources Director REVIEWED: Reyes Medrano, Jr., City Manager PURPOSE: Establish a consistent and legally compliant method for calculating overtime compensation for non-exempt employees working in multiple positions at different rates of pay within the same workweek, in accordance with the Fair Labor Standards Act (FLSA) and applicable law. BACKGROUND: This situation arises when an employee works outside of their primary job classification in an alternative role at a different rate of pay within the same workweek. In such cases, federal law requires that overtime be calculated using a weighted average of all applicable rates rather than a single hourly rate. Additionally, certain forms of compensation, such as shift differential and bilingual pay, must be included in the regular rate of pay when calculating overtime. This policy formalizes the required approach to ensure consistency and compliance with Fair Labor Standards Act (FLSA) requirements. DISCUSSION: This policy is administrative in nature and is intended to ensure the City’s compliance with federal wage and hour requirements under the Fair Labor Standards Act (FLSA). While the practice of calculating overtime using a weighted average rate is already required when employees work at multiple pay rates within a single workweek, this policy formally establishes a consistent methodology for applying that calculation across the organization. The policy also clarifies which types of compensation must be included in the regular rate of pay, such as shift differential, certification pay, bilingual pay, and on-call pay, ensuring accurate and compliant overtime calculations. Adoption of this policy supports transparency, consistency, and proper payroll administration when these situations occur. BUDGET IMPACT: There is no direct fiscal impact associated with the adoption of this policy. Any overtime costs resulting from the application of a weighted average rate are included within existing departmental overtime budgets and are consistent with current federal wage requirements. RECOMMENDATION: City Management recommends approval of Employee Handbook Policy 603.9.3 – Weighted Average Overtime to ensure compliance with Fair Labor Standards Act (FLSA) requirements and to establish a consistent method for calculating overtime when employees work at multiple rates of pay within the same workweek. ATTACHMENTS: 1. Weighted Average OT