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Do you have employees who perform different jobs at different pay rates? Do they ever work overtime? If you answered yes to either of those questions, then you need to know how to calculate blended overtime for dual pay rates.
In this article, we’ll walk through what a dual pay rate is, when it’s used, and how to calculate overtime pay for blended pay rates. Along the way, we’ll clear up common misconceptions about dual pay rates and offer information to help with compliance by staying aligned with some of the industry’s best practices.
A dual pay rate is a blended rate that combines two different pay rates, be they hourly rates or day rates. It might sound complicated at first, but it’s really just a weighted average used for determining overtime pay.
It’s important to know what a dual pay rate is, when it’s needed, and how to calculate one because in certain situations, overtime must be paid with a dual pay rate as required by the federal Fair Labor Standards Act.
When an employee works more than a certain number of hours in a single week, the FLSA requires them to be paid overtime.This is true in almost every state, and kicks in after 40 hours per week. Though film unions like SAG-AFTRA and DGA, have even tighter overtime restrictions.
When an employee is paid two different rates for two different jobs, the FLSA almost always requires that their overtime pay be calculated from a blended pay rate.
A dual pay rate is calculated to pay overtime for hourly employees or employees paid a day rate. Most commonly, dual pay rates are used to pay office workers and those in administrative positions who work multiple jobs within an office at different rates.
On a film set, dual pay rates can be paid to artists who do different tasks at different rates. For instance, crew members might have a different rate for prepping a set versus shoot days.
Say, for example, you have a gaffer that gets paid $25 an hour to plan lighting design during pre-production and $35 an hour to gaff during your actual shoot.
In one week, this gaffer performs 15 hours of pre-production planning and 30 hours of on-set work. Because they’ve worked over 40 hours in a single week, they need to be paid overtime. And because they’ve worked at two separate rates, according to the FLSA their overtime pay needs to be calculated based on a blended pay rate.
In order to calculate overtime for two pay rates, be sure to have the overtime rates of your state and a calculator handy. If you you’re already using Wrapbook for your film payroll and production accounting, we’ll calculate those dual pay rates automatically for you.
Here’s a quick rundown of how to calculate it.
First, get the hourly rates for both roles your employee performs. In the example above, we have two separate hourly rates: $25 an hour and $35 an hour. Simple enough.
To do this, you’ll need the number of hours worked along with both the hourly rates.
From our example, we have 15 hours pre-pro at $25 an hour and the 30 hours on-set gaffing at $35 an hour. The total weekly salary is $1,425.
Now calculate the weighted average hourly rate. To do this, divide the total weekly salary by the total number of hours worked.
Continuing with the example, the weighted average hourly rate is $31.67 ($1,425 divided by 45).
Determine the overtime rate, which is usually 1.5 times the regular hourly rate, though depending on how many overtime hours the employee worked, it could double the regular hourly rate. Know your overtime rates and when it kicks in by using this extensive list of overtime rules in every state.
The employee in our example worked 5 hours overtime. So their overtime pay is $158.33 (5 x $31.67).
You might be asking yourself, why not just pay the gaffer overtime at the on-set rate and move on? The overtime only occurred when they were working on-set, after all.
That would be convenient. However, per the FLSA there are only very limited circumstances in which you can pay two different overtime rates separately or overtime based on the regular rate of the position, which is known as the "overtime rate-in-effect.”
The most common misconception about dual pay rates is that as long as an employee agrees to be paid two different rates, it is okay to calculate their overtime based on the two separate rates and not pay the blended rate.
This is often untrue, and in many cases, failure to pay a blended rate can leave an employer open to trouble. To pay the OT rate-in-effect, specific conditions must be met.
There is a tried-and-true saying in the employment law world that “the blended rate is never wrong,” and following this rule of thumb will help your production remain compliant.
Thankfully, payroll solutions like Wrapbook can calculate blended overtime for dual pay rates automatically, helping employers steer clear of thorny compliance issues.
Dual pay rates allow employers the flexibility of contractor payments within the employee system. Instead of hiring a contractor to help with one-off projects, a dual pay rate allows employees to perform the work and get paid appropriately for the different jobs.
That means an employer doesn’t have to hire two separate people, which can cut down significantly on the hassle and cost of onboarding someone new for every project.
And given labor laws restricting the work contractors can perform, there are some jobs you can’t hire contractors for. So being able to shift an employee over to the project and pay them the proper rate is crucial.
Not everyone’s a fan of dual pay rates though. Sometimes, they can seem overly complicated. It can also be difficult to calculate and anticipate just how much you’re actually spending in overtime when paying dual rates.
Unfortunately, using a third-party provider or technology that is noncompliant is no protection against lawsuits.
Wrapbook calculates and applies dual pay rates for you, whenever necessary for every worker, saving you the hassle of figuring out overtime later, helping with compliance on your next production.
Wrapbook auto-calculates timecards for unions, alleviating payroll stress, so you can focus on the creative.
Dual pay rates are a great way to pay overtime to employees working two different rates. But as a producer and creative, this and other payroll topics should be the last thing on your mind. Reach out to us if you have questions about how you’re paying your cast and crew. We’re here to help.
You can also read more about how Wrapbook handles production payroll and accounting in here.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
Tom is a filmmaker, producer, and marketing specialist based in Los Angeles.
