Blended Payrates: What Are They, How Are They Calculated, & How Are They Used?

Definition: The blended payrate is the payrate to be used when calculating overtime pay. This rate is used to account for employees that work at different payrates throughout the workweek.

Calculation:

1.  Blended payrate is calculated by taking the total pay as if there wasn't any bonus overtime pay & dividing by the total hours worked.

2.  The blended payrate is then used to calculate the bonus pay contributed by any overtime multiplier.

How is it used?

Example: Sue works as a server & a hostess at the local steakhouse. The steakhouse is in a state where there is a 1.5x multiplier for all hours worked over 40 hours in a single workweek.

One workweek, Sue works two double shifts as a server for a total of 24 hours & three 8 hour shifts as a hostess for a further 24 hours. She is paid $4 an hour as a tipped server & $12 an hour as a hostess.

1.  The total pay is calculated as if no overtime occurs:
(24 hours * $4/hour) + (24 hours * $12/hour) = $384

2.  The total pay is divided by the total number of hours worked to find the blended payrate:
$384 / 48 hours = $8/hour

3.  The blended pay of $8/hour in the example is then multiplied by the number of OT hours & the OT multiplier of .5x to determine her bonus OT pay:
$8/hour * 8 hours * .5 = $32

4.  Sue's total pay for the workweek is her base pay without OT plus the bonus OT pay calculated with the blended payrate:
$384 + $32 = $416