How to Calculate Average Overtime

by Grace Ferguson; Updated September 26, 2017
Hourly employees usually qualify for overtime.

A nonexempt employee is not excluded from federal or state overtime pay requirements. Under federal law, you are supposed to pay overtime to nonexempt workers who work more than 40 hours for the week. Generally, an employer pays overtime at 1.5 times the employee’s regular pay rate. If an employee works multiple jobs at different pay rates with the same employer, to figure the overtime rate, the employer must first determine the weighted average for the regular pay rates.

Step 1

Add the employee’s total earnings from all jobs worked for the week. For example, she works 22 hours on one job at $11 per hour and 22 hours on another job at $12 per hour. First job: 22 x $11 = $242 Second job: 22 x $12 = $264 Total earnings for the week = $242 + $264 = $506

Step 2

Divide the total earnings by the total work hours for the week. Calculation: $506 / 44 hours = $11.50 -- weighted average rate of pay.

Step 3

Multiply the weighted average rate of pay by 1.5 to arrive at the average overtime rate. Overtime rate: $11.50 x 1.5 = $17.25 Regular wages: 40 hours x $11.50 = $460 Overtime wages = 4 hours x $17.25 = $69 Total weekly pay = $460 + $69 = $529

Tips

  • Overtime wages are normally due by the employee’s next regular payday. Consult your state labor department, which might have a different deadline and require overtime payment for work hours exceeding a certain amount for the day and hours worked on the seventh consecutive day of the week.

About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.

Photo Credits

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