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True Overtime Cost Calculator with Hidden Costs and Break-Even Hire Analysis

Project Real OT Cost Including FICA, Workers Comp, Turnover, and Incident Rate Multipliers

Free overtime cost projection calculator that shows the true cost of overtime, not just the 1.5x pay rate that shows up on a timecard. Enter your average hourly rate and weekly OT hours, and the calculator layers on FICA employer share (7.65%), workers compensation premiums (3% to 15% depending on trade classification), turnover costs from burnout and fatigue, and the increased incident rate that comes with extended work hours. Most operations managers are shocked to find their real OT cost is 2x to 3x the base rate, not 1.5x.

The break-even hire analysis is where this calculator earns its keep. It compares the annual cost of sustaining your current OT level against the fully burdened cost of hiring an additional employee (salary, benefits, training, onboarding). If your crew is averaging 15+ hours of OT per person per week, you are almost certainly spending more on overtime than it would cost to hire another body. The calculator shows you the exact crossover point so you can walk into a budget meeting with a number, not a guess.

Pro Tip: Workers comp premiums are calculated on gross payroll including overtime pay. If your experience modification rate (EMR) is 1.2 and your comp rate is 8%, you are paying 9.6 cents on every OT dollar. On a $35/hr worker doing 10 hours of OT at 1.5x ($525/week), that is $50.40/week just in extra workers comp. Add FICA ($40.16), and the real cost of that OT hour is closer to $62/hr, not $52.50.

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Overtime Cost Projection Tool
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How It Works

  1. Enter Base Labor Data

    Input the average base hourly rate and the number of workers in the group. Enter average weekly OT hours per worker. This establishes the baseline payroll cost.

  2. Set Burden Rates

    Enter or accept defaults for FICA employer share (7.65%), workers compensation rate (varies by trade, typically 3% to 15%), and any other payroll taxes or benefit costs that scale with gross pay.

  3. Add Hidden Cost Factors

    The calculator applies turnover cost estimates based on industry data (each turnover costs 30% to 100% of annual salary to replace) and incident rate multipliers (injury rates increase by 15% to 30% after 50+ hours per week). Adjust these factors for your specific operation.

  4. Review True OT Cost Per Hour

    See the all-in cost per OT hour including pay, payroll taxes, workers comp, and risk-adjusted indirect costs. Compare this to the simple 1.5x rate that most people assume.

  5. Run Break-Even Hire Analysis

    Enter the fully burdened annual cost of hiring one additional employee (salary, benefits, training, equipment). The calculator shows the OT volume at which hiring is cheaper than overtime.

  6. Export for Management Review

    Export the complete cost projection as a PDF for budget meetings or hiring justification presentations.

Built For

  • Plant managers building a business case for hiring 3 additional operators instead of running chronic 60-hour weeks
  • Construction PMs comparing the cost of a weekend overtime push vs mobilizing a second crew
  • HR directors presenting true OT cost data to executives who only see the 1.5x pay premium
  • Safety managers quantifying the financial risk of fatigue-related incidents from sustained overtime
  • CFOs modeling the break-even point for seasonal hiring vs mandatory overtime during peak production
  • Union negotiators demonstrating that reduced overtime saves the company more than the cost of hiring additional bargaining unit members
  • Operations directors tracking monthly OT cost trends to identify departments that consistently exceed hiring thresholds

Features & Capabilities

FICA and Payroll Tax Layer

Automatically adds the employer's 7.65% FICA share (Social Security 6.2% + Medicare 1.45%) to every OT dollar. Most OT cost estimates ignore this, understating the real cost by nearly 8%.

Workers Comp Premium Scaling

Workers comp premiums are based on gross payroll, including OT pay. Enter your classification rate and EMR to see the real comp cost on every OT hour.

Turnover and Fatigue Costs

Models the indirect cost of turnover driven by chronic overtime and the increased incident rate from extended work hours. Based on industry research showing injury rates climb 15-30% above 50 hours/week.

Break-Even Hire Analysis

Compares annual OT spending against the cost of adding headcount. Shows the crossover point where hiring becomes cheaper than overtime, accounting for all hidden costs.

Multi-Scenario Comparison

Model different OT levels (10, 15, 20 hours/week) side by side to see how costs escalate non-linearly as overtime increases.

PDF Export

Export the full cost analysis as a branded PDF for management presentations, budget requests, and hiring justifications.

Frequently Asked Questions

The true cost of an OT hour is typically 1.8x to 2.5x the base rate, not just 1.5x. A $30/hr worker's OT rate is $45/hr on the paycheck, but add employer FICA ($3.44), workers comp at 8% ($3.60), and indirect costs from reduced productivity and increased error rates, and you are closer to $55 to $60 per hour. For high-risk trades with workers comp rates above 10%, the true cost can exceed 2.5x base.
The typical break-even point is around 15 to 20 hours of overtime per week per position. If one person is consistently working 55 to 60 hour weeks, the fully burdened cost of hiring a second person ($50,000 to $80,000/year including benefits) is usually less than the annual OT cost for that position ($45,000 to $75,000/year in direct OT pay alone, plus hidden costs). The exact break-even depends on your benefits package and workers comp rate.
Workers comp premiums are calculated on gross payroll, which includes overtime pay. If your comp rate is 8% and a worker earns $525 in OT pay for the week, you owe an additional $42 in workers comp premium on that OT alone. Additionally, extended hours increase injury frequency, which raises your experience modification rate (EMR) over time. A high EMR compounds the problem by increasing your premium rate on ALL payroll, not just OT.
Yes. Research consistently shows that sustained overtime reduces hourly productivity. After 50 hours per week, output per hour drops 10% to 25%. After 60 hours, the productivity decline means you are getting roughly 6 productive days of output from 7 days of paid work. This means the marginal productivity of each overtime hour decreases the more OT a worker performs, making the effective cost per unit of output even higher than the wage premium suggests.
The employer pays FICA (7.65%) on all wages including overtime premiums, up to the Social Security wage base ($168,600 in 2025). The Medicare portion (1.45%) has no cap. So for a $30/hr worker earning $45/hr OT, the employer pays $3.44/hr in FICA on every OT hour. This is often overlooked in simple OT cost calculations because it does not appear on the employee's paycheck.
Beyond payroll taxes and workers comp, include: turnover costs (recruiting, hiring, and training replacements for burned-out workers), absenteeism increases (chronic OT leads to more sick calls), quality defects (fatigue drives error rates up 20-30% after extended hours), equipment damage (tired operators make more mistakes), and potential OSHA citations if sustained overtime creates safety hazards. A conservative estimate is 10-15% on top of direct OT costs for these indirect factors.
Disclaimer: Overtime cost projections are estimates based on industry averages and user-provided inputs. Actual costs vary by employer, jurisdiction, and industry. Workers compensation rates, FICA thresholds, and tax rates change annually. Consult your accountant or benefits administrator for precise figures.

Learn More

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