How to Calculate OT with Two Rates of Pay
When you pay an employee two rates of pay, calculating overtime pay can be a conundrum. You want to calculate OT at the lower rate; the employee thinks you should calculate it at the higher rate. Let’s break it down together using an example.
Step One: Calculate the straight rate of pay.
- Joe drives 3 hours each day to and from a job site. You pay him $20/hour for travel time. So, 3 hours x 5 days x $20 = $300.
- Joe works on-site for 40 hours a week. You pay him $35/hour. So, 40 x $35 = $1,400.
- Straight Pay: $300 + $1,400 = $1,700.
- Divide the straight pay amount ($1,700) by the total number of hours worked (55). Joe’s weighted average regular rate is $30.91.
- Number of hours of overtime (15) multiplied by .5 = 7.5
- 7.5 x $30.91 = $231.83
Still have questions? Your payroll specialist can help walk you through the particulars of your situation. McVay Business Services workers with Integrity Employee Leasing. 850-725-5696