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EspañolWhat does one more hour cost you?
Time and a half is charged on what an hour really costs you, not on the wage. And the honest comparison is not against zero. It is against driving back out there tomorrow.
What one more hour costs
An overtime hour costs you $48.75, not $37.50.
6 crew-hours at that rate costs $293 and bills $660 — leaving $368 of margin.
The premium applies to your loaded cost, not the bare wage.
Show the arithmetic
- Loaded cost = $25.00 × (1 + 30%) = $32.50
- Overtime = $32.50 × 1.5 = $48.75
- Premium over a normal hour = $16.25
Pricing overtime as 1.5× the wage gives $37.50 and understates it by $11.25 an hour. Employer payroll tax and workers' comp are charged on overtime earnings too.
6 crew-hours. $98 of that is the premium — the rest you would have paid anyway.
Show the arithmetic
- Crew-hours = 3 × 2 = 6
- At overtime = 6 × $48.75 = $293
- At straight time it would be $195
- Premium = $98
- Break-even billable rate = $48.75/hr
Stay late, or come back?
The hours get worked either way, so the real comparison is the overtime premium against the unbilled travel a second visit costs.
| Option | Extra cost |
|---|---|
| Finish tonight on overtime | $98 |
| Come back another daycheaper | $98 |
Coming back is $0 cheaper here, because the trip is short enough that the wasted travel costs less than the premium. Fatigue and callback risk are not in this arithmetic and both argue the same way.
The numbers live in the link and nowhere else.
This prices one late afternoon. It can't tell you how often it happens. Spanstead Works records hours against each job, so the pattern shows up before the payroll run does.
The four o'clock decision
The premium is visible. The drive back is not.
Late afternoon, the job needs two more hours, and somebody decides whether the crew stays or comes back tomorrow. The premium has its own line on the payroll report, so staying looks expensive and coming back looks free. It usually is not.
A $25.00 wage is $32.50 once payroll tax, workers' compensation, paid time off and benefits are counted, so at 1.5× an overtime hour costs $48.75 — more than the $37.50 you get from the bare wage, because tax and comp apply to overtime earnings too. But the premium alone is only $16.25 an hour. The base cost is not part of the decision: the work happens either way.
Coming back means a second round trip — driving out, unloading, setting up again, driving home. That is 1.5 hours per person you pay for and nobody pays you for: $98 of unbilled travel, against a premium of $98.
It gets decided wrongly because overtime arrives as a line item with a name and windshield time arrives as nothing at all. It is the same blind spot that makes billable utilization the most under-measured number in field service.
Two caveats. Tired crews are slower and more error-prone, and a callback caused by finishing at seven costs more than either option here. And on time-and-materials work overtime still bills, while on fixed-price work it comes straight out of the job. If you absorb overtime regularly the problem is not the multiplier — the job was quoted for fewer hours than it takes, which is a job costing problem.
Straight answers
Questions people actually ask
How do I calculate the true cost of overtime?
Start with the loaded hourly cost, not the wage: the wage plus employer payroll tax, workers' compensation, paid time off and benefits, which is typically 25% to 40% above the wage. Then apply the overtime multiplier to that loaded figure. A $25 wage at 30% burden is $32.50 loaded, and at time and a half an overtime hour costs $48.75, not the $37.50 you get by multiplying the bare wage.
Is overtime cheaper than sending the crew back another day?
Often yes, and owners routinely get this backwards. The hours get worked either way, so the real comparison is the overtime premium against the unbilled travel and setup a second visit costs. If a return trip means an hour and a half of driving per person, that travel often costs more than the premium on a few hours of overtime. The premium is a visible number on a payroll report. The wasted drive time is invisible, which is why the expensive option can feel like the cheap one.
Does time and a half apply to payroll taxes too?
Yes. Employer payroll taxes and workers' compensation are charged on overtime earnings just as they are on regular earnings, so the burden scales with the premium. Paid time off is the one component that does not, since PTO accrues on hours worked rather than dollars paid. The larger components do scale, which is why the premium is applied to the loaded cost here.
What overtime rate am I legally required to pay?
Federal law requires at least one and a half times the regular rate for non-exempt employees beyond 40 hours in a workweek. Several states add their own rules, including daily overtime thresholds and double time beyond a certain number of hours in a day. This calculator lets you set the multiplier because the correct one depends on where you operate. Check your state rather than assuming the federal minimum applies.
Should I bill the customer for overtime?
On time-and-materials work you generally can, and the calculator shows what those hours earn at your billable rate. On fixed-price work, warranty visits and callbacks you absorb them, and the whole overtime cost comes out of that job's margin. The distinction matters more than the multiplier: absorbed overtime is a pure loss, and a job that routinely needs it was mis-quoted rather than unlucky.
See how often it actually happens
One late afternoon is a judgement call. Twenty of them is a pattern, and it usually means jobs are being quoted short. Spanstead Works records hours against each job as the work happens, so the pattern shows up before payroll does.