Guide
How to Calculate Overtime With Two Pay Rates
If you work two jobs for the same employer at different hourly rates (for example, driving a forklift at $21 and packing at $17), overtime isn't paid at either rate. Under the US Fair Labor Standards Act, your regular rate is the weighted average of everything you earned that week. Overtime hours get an extra half of that average on top of the straight-time pay you've already earned. The only common exception is a prior agreement to pay overtime at the rate of the job you were doing at the time.
Why one hourly rate doesn't work
Overtime under the FLSA is 1.5 times the employee's regular rate, and there is only one regular rate per workweek. Federal regulation 29 CFR §778.115 says that when someone works at two or more rates in a single workweek, "his regular rate for that week is the weighted average of such rates". Using the higher rate overpays; using the lower one, or whichever job you happened to do last, can underpay.
The method, step by step
- Straight-time earnings: pay every hour worked at its own rate, including the overtime hours.
- Regular rate: divide straight-time earnings by total hours worked.
- Overtime premium: multiply overtime hours by half the regular rate.
- Gross pay: add the premium to the straight-time earnings.
regular rate = total straight-time pay ÷ total hours
gross pay = straight-time pay + overtime hours × 0.5 × regular rate
Step 3 uses half the rate, not 1.5 times it, because step 1 has already paid the overtime hours at straight time. Adding 1.5× on top would pay those hours 2.5 times over.
Worked example
A warehouse employee works 46 hours in one workweek:
| Job | Hours | Rate | Straight-time pay |
|---|---|---|---|
| Forklift operator | 32 | $21.00 | $672.00 |
| Packing | 14 | $17.00 | $238.00 |
| Total | 46 | $910.00 |
- Regular rate: $910.00 ÷ 46 = $19.7826 an hour.
- Overtime hours: 46 − 40 = 6.
- Overtime premium: 6 × 0.5 × $19.7826 = $59.35.
- Gross pay: $910.00 + $59.35 = $969.35.
Keep the unrounded regular rate until the last step. Rounding it to $19.78 first gives a premium of $59.34, a cent short, and those cents add up across a payroll.
The alternative: overtime at the rate of the job performed
Section 7(g)(2) of the FLSA, explained in 29 CFR §778.419, allows a different method if the employer and employee agree in advance: overtime hours are paid at 1.5 times the rate for the job actually being done during those hours. The rates must be genuine (bona fide) rates, at or above the minimum wage, that are really paid for that work in non-overtime hours.
The answer then depends on which job filled the hours after the 40th:
| Method | Calculation | Gross pay |
|---|---|---|
| Weighted average (default) | $910.00 + 6 × 0.5 × $19.7826 | $969.35 |
| Agreement, last 6 hours were packing | 32 × $21 + 8 × $17 + 6 × $25.50 | $961.00 |
| Agreement, last 6 hours were forklift | 26 × $21 + 14 × $17 + 6 × $31.50 | $973.00 |
Without a prior agreement, paying $961.00 for this week would underpay the employee by $8.35, even though the arithmetic looks reasonable. The same number can be lawful under one arrangement and a violation under another, which is why the agreement needs to exist before the work is done.
Other pay that changes the regular rate
The weighted average isn't only for two hourly jobs. Everything that goes into the regular rate is added to the straight-time pay before dividing:
- Shift differentials, such as an extra $2 an hour for nights. See shift differential pay.
- Non-discretionary bonuses: production, attendance and safety bonuses that were promised in advance.
- Commission and piece-rate earnings.
Discretionary bonuses, gifts, expense reimbursements and pay for time not worked (such as holiday or vacation pay) are generally excluded. The overtime pay guide covers the full list.
Checking your pay stub
Many pay stubs show this as two lines: straight time for every hour at each rate, and a separate "OT premium" or "half-time" line. To check it:
- Add the straight-time lines for all jobs (including any differential or bonus for the week).
- Divide by your total hours for the workweek.
- Halve that rate and multiply by your hours over 40. That should match the premium line.
If the stub instead shows overtime hours at 1.5× one of your rates, your employer is either using the job-performed method (ask whether you signed an agreement) or applying the wrong rate.
Outside the federal rule
State laws can add to this. California, for example, also pays daily overtime, so the overtime hours may be counted per day. See California overtime rules. In the UK, overtime rates are set by contract, so the contract decides which rate applies. See UK overtime pay rules.
Calculate it
Use the Overtime Calculator with the weighted regular rate from step 2 as your hourly rate to get the regular and overtime split. The Hourly Pay Calculator projects a typical week over a month or a year.