Benefits and Compensation

OT with Multiple Rates? Weighted Rate OR Agreement

In yesterday’s Advisor, we presented examples for calculating the “regular rate” pay. Today, overtime with shift differentials and multiple rates of pay, plus an introduction to the guide especially for small or even one-person, HR departments.

Example #3—Shift Differentials

[Go here for examples 1 and 2]

Employers must include shift differential pay when determining an employee’s regular rate of pay. Here’s an example:

A personal care assistant at an assisted living facility is paid $8 an hour and overtime on the basis of the 40 hour workweek standard. She works three 8-hour day shifts at $8 an hour and three 8-hour evening shifts. The assistant is paid $1 shift differential for each hour worked on the evening shift. How much should she be paid for her 8 hours of overtime?

The additional half-time must be computed based on the regular rate of pay. The regular rate is defined as the total remuneration divided by the total hours worked. The assistant earned a total of $408 for the 48 hours that she worked ($8 an hour times 24 hours plus $9 an hour times 24 hours). Her regular rate equaled $8.50 and her half-time premium is $4.25. Her total earnings for the 8 hours of overtime are $102.

Straight-time computation

 

3 days x 8 hours/day x $8/hour

$192

3 evenings x 8 hours/evening x $8/hour

$192

3 evenings x 8 hours/evening x $1/hour (shift differential)

$ 24

Total ST earnings

$408

 

 

Regular rate and half-time premium computation

 

$408 (total ST compensation) ÷ 48 (total hours worked) =

$ 8.50 (regular rate)

$ 8.50 (regular rate) x ½ =

$ 4.25 (half-time premium)

$ 8.50 (regular rate) + $ 4.25 (half-time premium) =

$12.75 (overtime rate)

 

 

Total compensation calculation

 

40 hours x $ 8.50 (regular rate) =

$340 (straight time earnings)

8 overtime hours x $12.75 (overtime rate) =

$102 (overtime earnings)

Total earnings

$442


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Multiple Rates of Pay

There are two possibilities for calculating overtime rates when employees work at two or more different jobs in a single workweek.

Under the weighted average method, the total straight time compensation for the week is divided by the total hours to get the regular rate.

However, an employee who performs two or more different kinds of work, for which different straight time hourly rates are established, may agree with his or her employer in advance of the performance of the work that he or she will be paid during overtime hours at a rate not less than one and one-half time the hourly rate established for the type of work he or she is performing during the overtime hours.

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