This estimated overtime pay calculation applies to hourly employees that have multiple pay rates in a weekly schedule
Overtime will be calculated using a regular rate of pay based on the weighted average rate. Please see more details on this calculation with the Department of Labor here.
Ultimately, how you choose to calculate overtime pay is up to you and you should consult your CPA with questions.
Calculating estimated wages with overtime
Regular Pay: First multiply each job rate by the number of job hours worked (overtime hours included), and adding these amounts together. This will give your regular pay amount.
Estimated Overtime (OT): Calculate your additional overtime amount by first dividing your regular pay by the total hours worked in the pay period (overtime hours included). This will give you the weighted average rate. Multiply this weighted average rate by 50% (for regular overtime) or 100% (for double overtime), and then multiply this rate by the amount of overtime hours to get the additional overtime pay.
Estimated Wages: Adding the overtime pay with your regular pay will give your total gross wages for the pay period.
Your employee works as a waiter 30 regular hours a week at $15 per hour. He also works as a bartender 10 regular hours a week at $12 per hour. He decides to work an additional 10 hours as a bartender in overtime. The following calculation will be used for gross wages:
- 30 regular waiter hours x $15 waiter rate = $450 waiter pay
- 10 regular bartender hours + 10 OT bartender hours x $12 bartender rate = $240 bartender pay
- $450 waiter pay + $240 bartender pay = $690 regular pay
- $690 regular pay / 50 total hours worked = $13.80 weighted average rate.
- $13.80 weighted average x 50% x 10 OT hours = $69 OT pay
- $690 regular pay + $69 OT pay = $759 total gross wages