Overtime Cost Projection Calculator
Project the annual cost of routine overtime across a team and see how it compares to hiring additional staff.
How it works
OT rate = wage × multiplier · Annual cost = employees × OT hours × OT rate × weeks · FTE equivalent = total OT hours ÷ 2,080
Occasional overtime is cheaper than hiring, but standing overtime is one of the most expensive ways to add capacity because every hour carries a premium. Projecting the yearly figure — and the full-time-equivalent headcount those hours represent — makes the build-versus-buy decision explicit. When the FTE equivalent approaches one or more, hiring usually wins even after burden.
Worked example
Ten employees working 6 overtime hours a week at $28/hr and time-and-a-half earn $42/hr for those hours. That is 10 × 6 × $42 = $2,520 a week, or $126,000 over 50 weeks. The premium portion — the extra half-rate — is $42,000, and the 3,000 overtime hours equal about 1.44 full-time roles.
Frequently asked questions
When is overtime cheaper than hiring?
For short spikes, overtime avoids recruiting, onboarding and benefit costs. But once the overtime hours add up to roughly a full-time role and recur every week, a new hire at a straight rate plus burden is usually cheaper than paying the perpetual premium.
What does the overtime premium mean?
It is the extra amount over straight-time pay — the half-rate in time-and-a-half. It isolates what the overtime rule itself costs you, separate from the wages you would pay for the same hours at normal rates.
How are full-time equivalents calculated?
Total annual overtime hours divided by 2,080 (a standard full-time year). It translates scattered overtime into the number of employees those hours could have staffed.
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Educational planning estimate, not accounting, tax or HR advice.