Skip to content
English
Contact us
  • There are no suggestions because the search field is empty.

How Blended Rates are Calculated

When a timesheet has hours worked at different pay/bill rates — for example, someone covered two different jobs or shifts in the same week — the system does not keep them separate. Instead, it figures out one average (blended) rate and uses it to calculate overtime and double-time premiums fairly. This follows U.S. Department of Labor overtime rules.

Blended Rate Pay Calculation

How SimpleVMS Calculates Overtime When Workers Have Multiple Rates


How Blended Rates Work

Step 1 – Find the Blended (Weighted Average) Rate

The blended rate is a weighted average, not a simple average. Hours worked at each rate are weighted by how many hours were at that rate:

 

Blended Rate = (All money earned at regular rates) ÷ (All hours worked)

 

Example: Someone works 30 hours at $10/hr and 10 hours at $12/hr.

A simple average would say $11 — but that’s wrong because they worked more hours at $10. The blended version:

 

(30 x $10) + (10 x $12) = $300 + $120 = $420

$420 ÷ 40 total hours = $10.50 per hour ← blended rate

 

The blended rate is $10.50, which leans toward $10 because most hours were worked at that rate.

 

Step 2 – Use the Blended Rate for the Overtime “Extra”

The blended rate is then used to calculate the premium (the extra pay) on overtime and double-time hours:

 

  • Overtime hours: paid at their normal rate + half the blended rate extra (time-and-a-half on the average)
  • Double-time hours: paid at their normal rate + the full blended rate extra
  • 30 hours as a warehouse worker @ $10/hr
  • 10 hours as a forklift operator @ $12/hr
  • 4 of those 40 hours are overtime (warehouse hours)

 

Step 3 – Add It All Up

 

Total Pay = Regular Pay + Overtime Pay + Double-Time Pay

 

The bill rate (what the client is charged) is blended the same way:

 

Blended Bill Rate = Total Billed ÷ Total Regular Hours

 

Full Worked Example

 

Sarah works two jobs in one week:

 

Step 1 – Blended Rate

(30 x $10) + (10 x $12) = $300 + $120 = $420

$420 ÷ 40 hours = $10.50 blended rate

 

Step 2 – Regular Pay (36 non-OT hours)

26 warehouse hrs @ $10 = $260

10 forklift hrs @ $12 = $120

Regular subtotal = $380

 

Step 3 – Overtime Pay (4 hours)

Base pay: $10 x 4 = $40

OT premium: $10.50 x 0.5 x 4 = $21

OT subtotal = $61

 

Total Pay

$380 (regular) + $61 (overtime) = $441

 

Without blending, the OT premium would have only used $10/hr (the warehouse rate), giving a lower and unfair result. The blended rate ensures the premium reflects Sarah’s full week’s earnings.

 

Important Gotchas

Blending only applies when ALL of the following are true:

 

  1. The person worked at two or more different rates (otherwise there is nothing to blend).
  2. There is at least some regular time on the timesheet.
  3. The work is not in Canada — Canada does not blend rates.

If any of those conditions fail, each chunk of hours is paid at its own rate with no blending.

 

One-Sentence Summary

 

The system pays each chunk of hours at its own rate, but uses a weighted-average “blended” rate to figure the overtime extra — so the OT premium reflects everything the person actually earned that week, not just one of their rates.