Weighted Average Overtime Pay: Blended Rate Formula (2026)

What Is Weighted Average Overtime?

When a non-exempt employee performs two or more jobs at different hourly rates for the same employer in a single workweek, the FLSA requires overtime to be calculated using the weighted average regular rate — also called the blended rate.

This rule comes from 29 CFR §778.115. Simply paying time and a half on whichever rate the OT hours happened to fall under is a wage violation.

The Weighted Average Formula

Step 1 — Calculate total straight-time earnings:

```

Total straight-time = (Rate A × Hours A) + (Rate B × Hours B) + ...

```

Step 2 — Calculate the weighted (blended) regular rate:

```

Blended rate = Total straight-time earnings ÷ Total hours worked

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Step 3 — Apply the half-time premium to OT hours:

```

Overtime premium = Blended rate × 0.5 × OT hours

```

Step 4 — Total weekly pay:

```

Total pay = Total straight-time + Overtime premium

```

The 0.5× premium is added because the straight-time portion of the OT hours is already included in Step 1.

Worked Example 1 — Restaurant Worker

Jamie works 30 hours as a server at $15/hr and 20 hours as a line cook at $22/hr at the same restaurant. Total: 50 hours.

• Server pay: 30 × $15 = $450
• Cook pay: 20 × $22 = $440
• Total straight-time: $890
• Blended rate: $890 ÷ 50 = $17.80/hr
• OT premium: $17.80 × 0.5 × 10 = $89.00
• Total weekly pay: $979.00

Compare to the wrong (illegal) method of paying 1.5× on the cook rate only: $890 + (10 × $22 × 0.5) = $1,000 — over by $21 if last 10 hrs were cooking, but $890 + (10 × $15 × 0.5) = $965 if servers — short $14. The FLSA requires the blended rate regardless of when the OT happened.

Worked Example 2 — Healthcare Worker

A CNA works 24 hours at $20/hr (day shift) and 20 hours at $24/hr (night shift differential) at one hospital. Total: 44 hours.

• Day pay: 24 × $20 = $480
• Night pay: 20 × $24 = $480
• Total straight-time: $960
• Blended rate: $960 ÷ 44 = $21.82/hr
• OT premium: $21.82 × 0.5 × 4 = $43.64
• Total weekly pay: $1,003.64

Shift Differentials, Bonuses, and Commissions

The weighted average rule also applies when including:

• Shift differentials (night, weekend, hazard pay)
• Nondiscretionary bonuses (production, attendance, safety bonuses)
• Commissions (must be allocated across the workweek)
• Piece-rate pay

Only truly discretionary bonuses (a surprise holiday bonus with no expectation) can be excluded. See How Bonuses Affect Overtime Pay for the full breakdown.

What's Excluded from the Regular Rate

29 CFR §778.200 excludes 8 specific payments:

• Gifts and discretionary bonuses
• Paid time off (vacation, holiday, sick) — when not actually worked
• Reimbursed business expenses
• Profit-sharing contributions to bona fide plans
• Stock options under qualifying plans
• Premium pay for daily/weekend/holiday hours (in some cases)
• Show-up pay and call-back pay
• Retirement and insurance contributions

Alternative: Section 7(g)(2) "Rate-in-Effect" Method

Under 29 USC §207(g)(2), an employer and employee can agree in advance to pay overtime at 1.5× whichever rate is in effect during the OT hour. This avoids the blended-rate math but requires:

• . A written or otherwise clearly communicated agreement before the work is performed
• . Each rate must be at least the applicable minimum wage
• . Overtime must still be paid for all hours over 40

Most employers default to the weighted average method because §7(g)(2) is easy to mess up.

Tax Treatment Under 2026 Rules

The 2026 "No Tax on Overtime" deduction applies to the premium half of weighted-average OT. In Jamie's example above, the $89.00 premium would be deductible (up to the $12,500 / $25,000 joint cap). Read the No Tax on Overtime 2026 Guide for filing details.

FAQ

Does the blended rate apply if I work for two unrelated employers?

No. The FLSA weighted average only applies when both jobs are for the same employer (or joint employers). Two separate W-2s = two separate 40-hour limits.

What if my employer just pays OT on my lower rate?

That's a wage violation. You're entitled to back pay plus liquidated (double) damages and attorney's fees.

Do tips count in the blended rate?

Tips are not included in the regular rate, but the cash wage (e.g., $2.13/hr tipped minimum) is. See Tipped Employee Overtime Pay.

Can a salaried non-exempt worker have a blended rate?

Yes. Convert the salary to an hourly equivalent (salary ÷ hours intended to cover), then average with any additional hourly work.