Weighted-average overtime is calculated using the following 4-step mathematical equation:
- All hours are treated as straight time (ST) and the hours are multiplied by the ST rate of pay to determine TOTAL A.
- TOTAL A is then divided by the total hours worked in the week and then divided by 2 to determine RATE B.
- RATE B is multiplied by the number of hours over 40 to determine TOTAL C.
- TOTAL A plus TOTAL C = weighted average gross pay.
An expanded example: Joe works 25 hours at $10.00/ph and 25 hours at $12.00/ph for a total of 50 hours in the workweek. 10 hours of overtime are calculated.
- (25 hours x $10.00) $250.00 + (25 hours x $12.00) $300.00 = $550.00
- $550.00 divided by 50 hours = $11.00 divided by 2 = $5.50
- $5.50 x 10 hours = $55.00
- $550.00 + $55.00 = $605.00 weighted average gross pay
That's a lot of calculations for each employee, each week!