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How is Weighted-Average Overtime Calculated?

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Weighted-average overtime is calculated using the following 4-step mathematical equation:

  1. All hours are treated as straight time (ST) and the hours are multiplied by the ST rate of pay to determine TOTAL A.
  2. TOTAL A is then divided by the total hours worked in the week and then divided by 2 to determine RATE B.
  3. RATE B is multiplied by the number of hours over 40 to determine TOTAL C.
  4. 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.

  1. (25 hours x $10.00) $250.00 + (25 hours x $12.00) $300.00 = $550.00
  2. $550.00 divided by 50 hours = $11.00 divided by 2 = $5.50
  3. $5.50 x 10 hours = $55.00
  4. $550.00 + $55.00 = $605.00 weighted average gross pay

That's a lot of calculations for each employee, each week!