California Labor Laws: What is a Blended Rate and When is it Used
Known as a weighted average, the State of California's Department of Industrial Relations defines the regular rate of pay, or blended rates as "...the compensation an employee normally earns for the work they perform. The regular rate of pay includes a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions. In no case may the regular rate of pay be less than the applicable minimum wage." In short, blended rates are rates that are calculated using the different forms of compensation an employee receives. The total is then divided by the total of numbers worked in order to get the blended rate.
But when are blended rates used? Generally, blended rates only affect employees who work in multiple positions or earn pay like bonuses, etc., and they're used for overtime calculations, shift violation pay like meal break violations, split shift violations, travel pay, etc.
For example, Janet works two positions: a busser @ $12.00/hr and dishwasher @ $13.00/hr. If she is owed any overtime (1.5x the blended rate), or a meal period penalty (1 hour @ an employee's regular rate of pay/blended rate), the pay would be calculated using her blended rate of $12.00 and $13.00.
Using Janet as an example, here's how her overtime would be calculated:Janet has worked 18 hours in a workweek, 10 hours as a dishwasher ($13.00/hr) and 8 hours as a busser ($12.00/hr). She is owed 2 hours of daily overtime at her blended rate.
- (($13.00 x 10)+ ($12.00 x 8)) / 18 hours = $130 + $96 / 18 = $12.56
- $12.56 x 1.5 = $18.83 blended overtime rate
- $18.83 x 2 hours = $37.67 overtime pay
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