Calculating Overtime With Different Hourly Rates
The calculation of overtime when caregivers work shifts at different hourly rates is a complex issue. We follow the guidelines set as the "default calculation" by the Department of Labor. This "default" requires the use of a weighted average in the calculation of Overtime. This is the standard calculation built into Smartcare used by agencies around the country. We follow this standard for the legal protection of our Agency partners. You may already know about this approach, but if you have questions here is a good resource:
This is the reason we use the Weighted Average approach.
The Weighted Average for a shift can be found on the Scheduling Dashboard > Select the Shift > Select View Shift History > In the Search Bar in the top right, type in "Average"
Based on the definition above, the Weighted Average can be calculated as well. It can be calculated by taking all of the Regular Hours Wages divided by the Total Hours in that work week for the caregiver.
Looking at caregiver Master Chief's schedule for June 25th - July 1st, we can calculate the Weighted Average. The Regular Hours Wages and Total Hours can be found by running the payroll report in Menu > Accounting > Reports > Payroll. In this scenario, the CSV file was chosen to show the breakdown of Regular Hours vs Overtime Hours.
From the payroll report for that week, we can see that the Regular Hours Wages total is $1090 and the Total Hours is 50. Taking $1090 divided by 50 = $21.80. This is the same number we find in the Shift History for the Weighted Average.
Once the Weighted Average is calculated, the Overtime Wage can be calculated by taking the Weighted Average and multiplying it by 1.5. So $21.80 x 1.5 = $32.70
To get the Time+Half Amount, the Overtime Wage is subtracted from the Wage used on that shift.
For example, looking at the shift on July 1st, the wage is set at $25.00. So if we take our Overtime Wage minus the Shift Wage it becomes $32.70 - $25.00 = $7.70. This wage is then used to calculate the Time+Half Total for that shift by multiplying it by the Time+Half Hours. This shift had 8.00 Time+Half Hours so it becomes $7.70 x 8.00 hours = $61.60. This is the same number we find in the Time+Half Wages column on the Payroll Report.
If there is a bonus on the shift, this will have to be accounted for. The bonus needs to be included into the shift rate prior to subtracting it from the Overtime Wage. For example, on the June 30th shift, there is a $10.00 bonus on an 10 hour shift, we would take $10.00/10 hours = 1.00. This then gets added to the wage for that shift. The wage is $20.00 so it becomes $20.00 + 1.00 = $21.00
Then we take our Overtime Wage amount and subtract from the bonus wage. So it would be $32.70 (calculated from our Weighted Average x 1.5) minus $21.00. $32.70 - $21.00 = $11.70. This shift had 2 Time+Half Hours so $11.70 x 2 hours = $23.40 Time+Half Wages which is the same number we find in the Time+Half Wages column on the Payroll Report for that shift.
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