Why not multiply the loaded labor rate by 1.5?

Because the premium is owed on wages, not benefits. Per-head costs in a loaded rate, such as health insurance, do not rise with extra hours; payroll taxes and workers' comp do.

When is time and a half legally required?

Under the Fair Labor Standards Act, covered non-exempt employees earn at least 1.5 times their regular rate for hours over 40 in a workweek. The Act sets no premium for Saturdays, Sundays or holidays as such; your labor agreement may.

What counts in the regular rate of pay?

All pay for the work, such as wages, shift differentials and production bonuses, averaged over hours worked. Discretionary bonuses, gifts and vacation or sick pay are excluded. For a crew, enter the average.

Is overtime cheaper than hiring?

Per hour it can be: overtime adds only pay-linked costs, while a hire adds per-head benefits, recruiting and training. Compare this page's cost per overtime hour with a new hire's loaded rate over the months you need the capacity.

Costing calculator

Overtime Cost Calculator

Price an overtime run before you approve it: the total bill, the premium above straight time, and labor cost per unit. You need crew, hours, regular rate of pay, multiplier, payroll burden and output.

What this calculator does

What an overtime run costs per unit made, and how much of it is premium over straight time.

Formula used

Cost per overtime hour = regular rate of pay × multiplier × (1 + pay-linked burden)
Overtime labor cost = cost per overtime hour × operators × overtime hours per operator
Premium = regular rate × (multiplier − 1) × (1 + burden) × operators × hours; straight time = labor cost − premium
Overtime labor cost per unit = overtime labor cost ÷ overtime output; premium per unit = premium ÷ output
Output per labor hour = overtime output ÷ (operators × overtime hours per operator)

Inputs explained

Operators on Overtime: Hourly employees working the extra hours.
Overtime Hours per Operator: Hours each operator works at the overtime multiplier.
Regular Rate of Pay: Hourly wage plus shift differential, before benefits and payroll taxes.
Overtime Multiplier: 1.5 for time and a half, 2 for double time.
Pay-Linked Burden: Employer Social Security, Medicare (7.65%), workers' comp and unemployment, % of pay.
Overtime Output: Good units the crew will make in the overtime hours.

How to use the result

Best suited to approving a saturday to recover a late order, comparing overtime with a temporary crew, budgeting a month of extended shifts.
Uses the output you enter; it does not assume straight-time productivity carries into overtime. Labor only: utilities, supervision and machine wear during the extra hours are not included.

Current U.S. benchmarks

U.S. manufacturing runs at 75.7% of capacity (Federal Reserve, Aug 2026). New factory orders are up 8.5% year over year (Census).

Common questions

Why not multiply the loaded labor rate by 1.5? Because the premium is owed on wages, not benefits. Per-head costs in a loaded rate, such as health insurance, do not rise with extra hours; payroll taxes and workers' comp do.
When is time and a half legally required? Under the Fair Labor Standards Act, covered non-exempt employees earn at least 1.5 times their regular rate for hours over 40 in a workweek. The Act sets no premium for Saturdays, Sundays or holidays as such; your labor agreement may.
What counts in the regular rate of pay? All pay for the work, such as wages, shift differentials and production bonuses, averaged over hours worked. Discretionary bonuses, gifts and vacation or sick pay are excluded. For a crew, enter the average.
Is overtime cheaper than hiring? Per hour it can be: overtime adds only pay-linked costs, while a hire adds per-head benefits, recruiting and training. Compare this page's cost per overtime hour with a new hire's loaded rate over the months you need the capacity.

Related guides

Last reviewed 2026-10-01.