Know what your overtime actually costs before you schedule it. Enter base wage, hours worked, state rules, and burden rate—get total payroll cost, effective hourly cost, and how much that overtime job needs to bill to break even.
An employee earning $28/hr doesn't cost you $28/hr. Add employer FICA (7.65%), FUTA/SUTA (~3%), workers compensation insurance (6–15% depending on trade and state), and any benefits, and you're at $35–$40/hr in real cost. On overtime hours at 1.5× base, that same employee costs you $49–$56/hr. If you're billing $65/hr and "making money on overtime," check your math—you may be losing after burden.
Federal FLSA requires 1.5× after 40 hours per week. California, Alaska, and Nevada require 1.5× after 8 hours per day—an employee who works 10 hours Monday through Thursday hits daily OT on every day, not just at 40 hours total. California also requires double time after 12 hours in a day and after 8 hours on the seventh consecutive day. Misclassifying overtime exposure is a wage-and-hour violation with significant back-pay liability.
If you accept a rush job that requires Saturday work or extended hours, the overtime premium belongs in the quote—not in your margin. Calculate what that employee's OT hours actually cost you (wage × OT rate × burden) and compare to what you bill. If billing rate doesn't cover cost with your target margin, either raise the quote or decline the job. Absorbing OT costs is the most common way trade contractors finish a profitable-looking job in the red.
The Tradesman's Business Starter Kit includes financial tracking forms, service agreement templates, and business planning tools that make your numbers visible before they become problems. Guide from $19 — Complete Kit with all 19 templates, $49.
Get the Business Kit — $19Overtime hours cost more than 1.5× the base wage — once you factor in employer taxes, workers' comp, and burden, the real cost of an overtime hour is significantly higher. Enter your employee's base wage and burden rate to see the true cost per overtime hour, then compare it to what you're billing to decide if OT is actually profitable for you.