How to Calculate Overtime When an Employee Has Two Pay Rates (Weighted Average)
When one worker earns two hourly rates in the same week, the federal rule sets overtime from a weighted average of both rates rather than from either rate alone. Here is the math in a table, a second example that shows the order of the work does not matter, the mistakes that show up in audits, and how the hours get to payroll.
SEPTEMBER 15, 2026 · BY THE CLOX TEAM
01
The rule: one regular rate for the week
Overtime under the Fair Labor Standards Act is paid on the regular rate, and when a week has two rates in it, the regular rate is a weighted average. 29 CFR 778.115 (read September 8, 2026) covers an employee who works at two or more different rates in a single workweek. The regular rate for that week is the total straight-time earnings from all rates divided by the total hours worked.
The overtime premium is then half of that regular rate for each hour over 40. The premium is half rather than 1.5 times because the straight-time pay for every hour, including the overtime hours, is already inside the total you added up. The only thing still owed is the half-time premium. If you'd rather compute from scratch, pay 40 hours at the regular rate plus 1.5 times the regular rate for each hour over 40. Both methods land on the same total.
Two-rate weeks are common in the trades. A journeyman runs service calls at one rate and works new installs at another. A laborer drives between sites at a lower travel rate, which is allowed with conditions we cover in Can You Pay a Different Rate for Travel Time?. An apprentice moves up a rate step on Wednesday. Prevailing-wage jobs add their own version of the problem, which we cover in How to calculate overtime for prevailing-wage jobs.
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Worked example: 30 hours at $28 and 16 hours at $22
A worker puts in 30 hours on an install job at $28 an hour and 16 hours on service calls at $22 an hour in the same workweek. That's 46 hours, so 6 are overtime.
Carry the regular rate unrounded through the premium step. If you round it to $25.91 first, the premium comes out at $77.73, a penny short on this check, and the same error repeats on every two-rate week for every worker.
The from-scratch method checks the same answer: 40 hours × $25.913 = $1,036.52, plus 6 hours × $25.913 × 1.5 = $233.22, for a total of $1,269.74.
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Second example: the same hours in a different order
The weighted average does not care which hours came first. Here is the same week laid out by day, with the lower-rate service work at the start of the week and the higher-rate install work at the end.
Hour 40 lands partway through Friday, so hours 41 to 46 all happen on the $28 install job. Under the weighted average that changes nothing: total straight time is still $1,192, total hours are still 46, the regular rate is still $25.913, the premium is still $77.74, and the week pays $1,269.74. Flip the week so the three $28 days come first and the two $22 days come last, and the answer is the same $1,269.74.
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The alternative: 1.5 times the rate in effect
The regulations allow a different method, but only by agreement made before the work is done. Under 29 CFR 778.419 (read September 8, 2026), an employee who performs two or more kinds of work at different straight-time rates "may agree with his employer in advance of the performance of the work that he will be paid during overtime hours at a rate not less than one and one-half times the hourly nonovertime rate established for the type of work he is performing during such overtime hours." If there is no agreement, the weighted average applies.
Under the rate-in-effect method the order of the work decides the check. Using the second example, the 6 overtime hours fall on Friday at $28, so the premium is 6 × $28 × 0.5 = $84.00 and the week pays $1,276.00. Flip the week so the $22 work comes last and the premium is 6 × $22 × 0.5 = $66.00 and the week pays $1,258.00.
The same hours at the same two rates produce three different totals depending on the method and the order of the work. If you want the rate-in-effect method, put it in writing, have the worker sign it before the first two-rate week, and apply it every week the same way. If you can't produce that agreement, the weighted average is the rule you are held to.
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Common mistakes with two-rate overtime
- Paying 1.5 times the lower rate for every overtime hour. Without an advance agreement, this underpays. In the example it's $66.00 instead of $77.74, which is $11.74 short for one worker in one week.
- Averaging across the pay period instead of the workweek. The regular rate is computed per workweek. A biweekly pay period does not merge two weeks into one 80-hour block. A week of 46 hours followed by a week of 34 hours has 6 overtime hours, not zero.
- Forgetting a shift differential. If night work pays $2 more an hour, those hours are a third rate. The hours and the dollars go into the weighted average like any other rate. Leaving the differential out understates the regular rate and the premium.
- Rounding the regular rate before the premium step. Keep the decimals until the final dollar figure.
- Counting only the weekly 40 in a daily-overtime state. In California the number of overtime hours comes from daily thresholds as well as the weekly 40, per the state's overtime FAQ (read September 8, 2026). The regular-rate question is separate from the counting question, and the state agency publishes its own guidance. We cover the daily thresholds in California overtime rules for trades.
A quick check on any two-rate week
The weighted average always lands between the two rates. If your regular rate comes out above the higher rate or below the lower one, an hour or a dollar figure is wrong somewhere in the inputs.
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What this looks like in Clox
Clox supports multi-rate pay per job, so a worker's hours on the $28 install and the $22 service route each carry their own rate. Every hour is tagged to a job and a task when the worker clocks in. A worker can switch jobs mid-shift without clocking out, so a morning of service calls and an afternoon on the install show up as separate entries under the right jobs. Setting that up is covered in the projects, clients, and tasks docs.
Overtime thresholds live on each employee, daily and weekly, with a multiplier that defaults to 1.5x and can be set from 1x to 3x. The org-wide rule set is Standard (weekly) or California (daily overtime, double time, meal-break review). The overtime and break rules docs show where each setting lives.
On the Reports page, Regular and Overtime hours are separate columns, shown in h:mm or decimal, and the CSV and Excel exports carry those hours one shift per row, each shift tagged to its job. The payroll formats (QuickBooks Online, QuickBooks Desktop, ADP RUN, ADP Workforce Now, Paychex Flex, Gusto, and a universal CSV) carry the hours in the layout each system expects. Clox gives payroll the hours by job and the overtime hours. The weighted-average premium itself is computed by your payroll system from those exported hours by rate. To check what payroll produced, the overtime pay calculator handles the single-rate case and the table above handles the two-rate case.
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FAQ
Do I use the weighted average or 1.5 times the higher rate?
Can I pay 1.5 times whatever rate the worker was on during the overtime hours?
What if the worker has three or four rates in one week?
Does a lower travel rate count in the average?
Does this change in a daily-overtime state?
A payroll professional or an employment attorney can confirm your setup for your state and your agreements with the crew. This is general information, not legal advice.
Clox is free for 14 days and asks for no credit card, and a 30-day money-back guarantee covers the first paid subscription. Start a free trial, set a rate on each job, and run one two-rate week through the export to see what payroll receives.