Overtime Assignment Economics
How does overtime change this assignment's economics?
Overtime hours contribute $107.50 on their own, a thinner per-hour margin than regular time.
Why this comes up
Overtime hours are paid at a premium, and often billed to the client at a premium too, but the two premiums rarely match exactly, and burden is calculated on total wages, not separately per bucket. Assuming overtime economics scale the same way regular hours do is a common source of surprise when a heavy-overtime week's real contribution doesn't match expectations.
How we calculated this
Regular Pay = Regular Hours x Pay Rate OT Pay = Overtime Hours x Pay Rate x OT Multiplier Total Loaded Cost = (Regular Pay + OT Pay) x (1 + Burden %) Total Billings = Regular Hours x Client Regular Rate + Overtime Hours x Client OT Rate Total Contribution = Total Billings - Total Loaded Cost
Burden taxes gross wages regardless of regular/OT classification, so it's computed once on total wages and allocated back proportionally for the regular/OT contribution breakdown, not computed separately per bucket.
Worked example: 40 regular hours, 10 overtime hours, $25/hr pay, 1.5x OT multiplier, 18% burden, $43.38/hr regular bill rate, $55/hr OT bill rate.
Regular Pay = 40 x 25 = $1,000 OT Pay = 10 x 25 x 1.5 = $375 Total Loaded Cost = (1,000 + 375) x 1.18 = $1,622.50 Total Billings = 40 x 43.38 + 10 x 55 = $2,285.20 Total Contribution = 2,285.20 - 1,622.50 = $662.70 (29.0% margin) Regular Contribution ~ $555.20, OT Contribution ~ $107.50
What this means
- Overtime hours don't automatically carry the same margin as regular hours; whether they help or hurt blended margin depends on how the client OT bill rate compares to the 1.5x (or your state's) pay multiplier.
- Because burden is allocated proportionally by wage share, not computed independently per bucket, the regular/OT contribution split reflects actual payroll-tax reality, not a simplified assumption.
- A client OT bill rate that doesn't rise as much as your pay multiplier compresses margin specifically on overtime hours, worth flagging before a heavy-overtime assignment is accepted, not after.
Common mistakes
- Computing burden separately on regular and overtime pay as if they were two independent payrolls, rather than one combined wage base.
- Assuming the federal 1.5x multiplier applies everywhere; several states require daily overtime or a higher multiplier.
- Not confirming the client's OT bill rate in advance, only to find contribution on overtime hours is thinner than regular hours once the assignment is underway.
Frequently asked questions
Does this use my state's overtime rules automatically?
No, it uses the federal FLSA baseline (1.5x for hours over 40/week) by default, but the multiplier is fully editable; override it for your state's actual requirement, including daily overtime rules this engine doesn't model separately.
Why is burden split proportionally instead of calculated separately?
Payroll taxes are assessed on total gross wages for the pay period, not tracked separately by hour type. Splitting burden by wage share is the accurate way to attribute it back to regular vs. OT contribution.
What if the client doesn't pay a premium for overtime?
Set the client OT bill rate equal to the regular rate; the engine will show you exactly how much that compresses contribution on overtime hours, since you're still paying the worker premium while billing standard rate.
Limitations
Uses the federal FLSA baseline (1.5x for hours over 40/week). State law can require a higher multiplier or daily overtime; override the multiplier for your state. This is not an employment-law calculator.
Next decision
Learn more
What Goes Into Staffing Labor Burden? — why burden is computed on total wages, not separately per regular/OT bucket.