TimeWorksPlus Knowledge Base

Overtime Pay Rates and Blended Pay Rates - TWP

Last Updated: Aug 15, 2017 02:22PM MDT
When using pay rates1 in timekeeping, TimeWorksPlus automatically adjusts the pay rate on the time card to show overtime as time and a half. If employees are paid at multiple pay rates (based on a job or punch category), the system default uses 1.5x the pay rate in effect at the moment they reach overtime. However, there are two additional options for determining the overtime rate. These options are referred to as blended rates.

To Enable Blended Payrates

Go to Accountant Menu > Settings Menu > Processing Rules. Choose the Pay Rate Calculation radio button and select the BlendPayRates rule.

The Blend Pay Rates Processing Rule page.
BlendPayRates allows for altering the rate based on an amalgam of all the rates (and certain pay items) used during the week. In the Options box, you would enter the number of the blending method based on your client's overtime rate policy.

Option 1 - Change Overtime Rate

This is the most commonly used method of blending. The system first calculates the total pay for the work week:
 
(hours_at_rate1 * rate1) + (hours_at_rate2 * rate2) +
(hours_at_rate3 * rate3) + pay_items = total_pay

The total pay is then divided by the total hours worked and multiplied by 1.5 to determine the blended overtime rate.
 
(total_pay / total_hours) * 1.5 = blended_ot_rate

Here's an example of how a blended rate would be calculated when an employee works at two different pay rates. Cecil works:
 
30 hours at $10/hr

15 hours at $15/hr

He reaches OT at 40 hours.

((30 hours * $10/hr) + (15 hours * $15/hr)) = $525 total pay at base rate

($525 / 45 total hours worked) * 1.5 = $17.51/hr adjusted overtime rate

Option 2 - Change Base Pay Rates

This method still gives the same totals, but instead of changing the overtime rate, the base rates are adjusted so that the overtime rate is always 1.5x the base rate.

Counting Pay Items (Amount Categories) Towards the Blended Rate

Pay items on the time card like Bonus or Commission can also be included in the blended overtime rate. In order for those punch categories to be included in the calculation, they need to be set to Overtime Eligible in the Punch Categories rule. 

Because the Bonus category is set to Overtime Eligible, it will be included in the blended rate calculation.
Tips is not Overtime Eligible and will not be included in the calculation.

1 - Note, pay rates will only appear on the time card if you have turned on the PayRates Processing Rule and added pay rates to Employee Setup.
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