Weighted Average Regular Pay Rate for Overtime

If an employee earns two or more different pay rates for different tasks during a single 7 day workweek, a weighted average of the pay rates is calculated to establish a "regular pay rate" for use in all pay calculations for that workweek.

For example, suppose within one workweek, an employee works a total of 45 hours where the first 24 hours were at a rate of $10.00 and the next 21 hours were at a rate of $15.00. The weighted average "Regular Rate" for use in overtime calculations would be calculated using the following formula.

 (24 hrs * $10.00/hr) + (21 hrs * $15.00/hr) 
 ------------------------------------------- = $12.33 regular rate per hour.
 45 total hours worked.

Therefore the employee would have gross pay based on the following:

 24 hours * $12.33 per hour regular rate          = $295.92  
 16 hours * $12.33 per hour regular rate          = $197.28  
 5 hours  * $12.33 per hour regular rate * 1.5 OT =  $92.48  
                                                    $585.68 Gross Pay

Some of the actual US legal code appears below...

29 CFR 778.109 - The Regular rate is an hourly rate.

The "regular rate" under the Act is a rate per hour. The Act does not require employers to compensate employees on an hourly rate basis; their earnings may be determined on a piece-rate, salary, commission, or other basis, but in such case the overtime compensation due to employees must be computed on the basis of the hourly rate derived therefrom and, therefore, it is necessary to compute the regular hourly rate of such employees during each workweek, with certain statutory exceptions discussed in 778.400 through 778.421. The regular hourly rate of pay of an employee is determined by dividing his total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid. The following sections give some examples of the proper method of determining the regular rate of pay in particular instances: (The maximum hours standard used in these examples is 40 hours in a workweek).

29 CFR 778.115 - Employees working at two or more rates.

Where an employee in a single workweek works at two or more different types of work for which different nonovertime rates of pay (of not less than the applicable minimum wage) have been established, his regular rate for that week is the weighted average of such rates. That is, his total earnings (except statutory exclusions) are computed to include his compensation during the workweek from all such rates, and are then divided by the total number of hours worked at all jobs. Certain statutory exceptions permitting alternative methods of computing overtime pay in such cases are discussed in 778.400 and 778.415 through 778.421.

References: 1 2
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