Weighted/blended OT is a way of calculating overtime premium pay when an employee works multiple positions at different pay rates. The result is an overtime rate that is skewed closer to 1.5x the pay rate of the job with more hours that workweek.
1. This overtime premium is calculated separately each workweek.
2. How is this calculated?
The earnings from all such rates are added together. This total is then divided by the total number of hours worked at all jobs. This calculation give you the average hourly pay rate for the workweek. The hourly overtime premium is then calculated by multiplying the average hourly pay rate by 0.5. The result is multiplied by the number of overtime hours worked to arrive at the total overtime premium for the workweek.
During one workweek, Bob works 15 hours as a line cook at $20 per hour and another 35 hours as a server at $15 per hour. He works a total of 50 hours during the week (40 regular and 10 overtime).
$20 x 15 = $300 (line cook straight hourly earnings)
$15 x 35 = $525 (server straight hourly earnings)
Total straight hourly earnings = $825
$825/ 50 total hours = $16.50 average hourly pay
$16.50 x 0.5 = $8.25
$8.25 x 10 = $82.50
Total hourly earnings for the week (including OT) = $825 + 82.50 = $907.50
Since Bob worked more hours at $15/hr than he did at $20/hr, it logically follows that his weighted OT rate of $24.75 (think $16.50 + $8.25) is closer to $22.50 (1.5 x $15) than it is to $30 (1.5 x $20).
3. Since aggregated employers are obligated to consider hours worked at all location when calculating overtime pay, these employers should also adhere to weighted overtime rules or avail themselves to the exception below.
Employers and employees can agree (in writing BEFORE the work is performed) to waive weighted overtime and compute overtime pay based on one and one-half times the hourly rate in effect when the overtime work is performed.
To keep our clients in compliance with this rule, weighted overtime is automatically calculated on payrolls processed through KitchenSync's processing platform.