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.
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