Overtime Labor Cost Calculator — Machine Work

OT pay is the total amount you pay the operator for overtime hours — for example, $26/hr × 1.5 × 8 hours = $312. However, you would have paid for those same 8 hours anyway if they were regular time ($26 × 8 = $208). The OT premium is only the extra you pay because it's overtime: $312 − $208 = $104. This distinction matters when evaluating whether OT is more cost-effective than hiring additional headcount. The premium is your "urgency tax" — the cost of getting the work done without scheduling a new hire or a second shift.

Under the federal Fair Labor Standards Act (FLSA), the mandatory minimum for non-exempt employees is 1.5× for all hours worked beyond 40 in a single workweek. Federal law does not require double time (2×) — that's a state-level or contractual requirement. California mandates 1.5× after 8 hours in a day and 2× after 12 hours in a day, or for any hours on the 7th consecutive workday. Alaska requires 1.5× after 8 hours/day or 40 hours/week. Some union contracts specify 2× for Sundays, holidays, or hours beyond a daily cap. Always check your state labor law and any applicable collective bargaining agreements.

It depends on your purpose. For FLSA payroll compliance, use the base hourly wage (or "regular rate of pay" as defined by FLSA, which includes non-discretionary bonuses and shift differentials). For job quoting and profitability analysis, use the fully burdened rate — base wage plus employer payroll taxes (FICA ~7.65%), workers' compensation insurance, health benefits, and any other employer-side costs. In US manufacturing, the fully burdened rate is typically 30–50% above base wage. Using base wage alone can cause significant underquoting on jobs that require overtime hours.

Not always — and the comparison is more nuanced than just the hourly rate. Overtime avoids onboarding costs, training time, and fixed benefit overhead for a new hire. For short-term volume spikes (a few weeks), paying 1.5× OT to existing operators is often cheaper and faster than hiring. However, if OT is sustained for months, the math shifts. A new hire at $26/hr for 40 hours costs $1,040/week vs. 40+10 hours OT at 1.5× costing $1,430/week. Over a year, sustained 10-hour weekly OT adds roughly $20,000+ per operator compared to hiring a second worker. Use the Annual Projection in this calculator to model the break-even point for your situation.

The One Big Beautiful Bill Act (P.L. 119-21) did not change how overtime is calculated or what employers must pay — FLSA rates and rules remain unchanged. What changed is how employees are taxed on OT earnings. Eligible FLSA-covered workers can now deduct up to $12,500 (single filer) or $25,000 (joint filer) of qualified OT income from their federal taxable income for tax years 2025–2028. This lowers the employee's federal income tax bill but does not affect Social Security or Medicare taxes. For employers, the OT cost calculation is exactly the same as before. Starting with tax year 2026, employers must separately report qualified OT amounts on W-2 forms. This calculator reflects the cost to the employer — the tax benefit for employees is separate and should be discussed with a tax professional.

Run the calculator individually for each operator's wage and OT hours, then sum the results. If all operators share the same wage and hours, multiply the single-operator result by headcount. For example, 5 CNC operators at $26/hr each working 8 hours of 1.5× OT costs 5 × $312 = $1,560 in OT pay, with an OT premium of 5 × $104 = $520. For mixed wage cells, calculate each separately. When quoting jobs requiring full-cell overtime, always add total cell OT cost to your conversion cost per part rather than just using one operator's rate.

Yes — with one extra step. Salaried non-exempt employees (those who earn less than $684/week or whose job duties don't meet FLSA exemption criteria) are still entitled to OT. To use this calculator, first convert their weekly salary to an hourly "regular rate": divide the weekly salary by the number of hours the salary is intended to cover (typically 40). For example, a $1,100/week salary ÷ 40 hours = $27.50/hr. Enter that as the base wage, then input the OT hours and rate. Always verify the correct regular rate with your payroll or HR team before using it for compliance purposes.