Calculating overtime in most states for employees with a set hourly rate is usually not an issue. Most payroll specialists and business owners are aware that overtime is 1.5 times the hourly set rate an employee earns in a 40 hour work week.
But overtime in Nevada is not so straightforward. We have daily and weekly overtime rules in Nevada. Currently, the minimum wage is 12/hr, our overtime rate is 1.5 times so, 18/hr for overtime pay. But when is it required to be paid? Any employee earning less than 18/hr is entitled to overtime pay daily, in a 24 hour period. Wait? What?- Yes you heard that correctly, in a 24 hour period. We have these rules as so many employers in our state run a 24 operation and because our wage an hour rules specify that employees must have a certain amount of rest in a 24 hour period.
So here is an example of how the 24 hour rule and daily overtime works for a server in Nevada:
Sever works Monday- 11am to 7:30pm takes the required 30 min unpaid break- this employee is only entitled to regular pay of 12/hr for their shift plus tips. But if this same server is called back for a breakfast shift 7am to 11am they can actually become entitled to daily overtime pay for this breakfast shift because it is within the 24 hour period.
Shift differential pay: in Nevada we have several workers that work different jobs in a day or a week. For those who perform multiple jobs with varying pay rates within the same workweek, calculating overtime can be more complex. In such cases, employers must use a blended overtime rate. For instance, a warehouse employee who earns $15 per hour as a general warehouse worker and $18 per hour while operating a forklift. If this employee works 45 hours a week, with 30 hours as a warehouse worker and 15 hours as a forklift operator, their employer would need to calculate a blended rate to determine their overtime pay.
What is Blended Overtime?
The Fair Labor Standards Act requires that when work is performed at two or more rates, overtime must be paid out at a blended overtime rate, also known as weighted overtime or weighted average. A “blended rate” is a rate of not less than 1.5 times the weighted average of all non-overtime rates used during that workweek.
This type of payroll calculation is required when you have employees who perform different duties or tasks at different rates. This can be even more challenging for our Nevada employers who try to manually calculate this because the daily overtime rules can affect blended overtime rates. The same warehouse worker listed above, if they worked 5 hours in a day at $15/hr and 4 more hours at $19/hr as the forklift operator and took the required 30 min unpaid lunch break, this employee would actually be entitled to 1/2 hour of daily overtime at the blended rate: 15+19/2=$17/hr X1.5 =$25.50 as the daily overtime hourly rate for the 1/2 hour of work. So this employee should be paid: 5 hours of regular pay at 15/hr and 3.5 hours of regular pay at 19/hr plus the 1/2 hour of overtime at 25.50/hr
This becomes even more challenging to calculate out over multiple job assignments in a 40 hr week.
Here is a standard 40 hour work week calculator (no daily overtime factored in)
Follow these steps to calculate overtime with two different pay rates:
- Determine the employee’s base pay:
- Multiply the number of hours worked in both roles by hourly rates.
- Determine the sum of the total wages from these positions to figure out the total amount compensated.
- Calculate the blended rate:
- Divide the total weekly earnings by the total number of hours worked in the week.
- Calculate Overtime Pay:
- Determine the number of overtime hours worked (hours worked exceeding 40 in a standard workweek).
- Multiply the blended rate by 1.5 to find the overtime rate.
- Multiply the overtime rate by the number of overtime hours to calculate the overtime pay.
- Calculate the total earnings:
- Add the total weekly earnings to the overtime pay.
Employers must calculate this every single week for each employee who performs work at different rates. All rates must be over minimum wage, and the regular rate must include any other compensation, such as bonuses, cost-of-living adjustments, and the like.
For all your payroll needs and questions, you can contact our team of professionals at ManagedPAY!