Free ForeverNo SignupHire vs OvertimeUpdated 2026

Overtime Cost Calculator

Calculate the true cost of overtime — premium pay, productivity decline, and the break-even point against hiring.

Overtime costs more than the premium rate suggests. Beyond 1.5× pay, sustained overtime reduces productivity by 25–50% in weeks 3–4, increases error rates, and drives turnover. The real cost of chronic overtime is often 2–3× the base hourly cost. Compare this to the cost of an additional hire.

Overtime Hours Per Person / Week

Average hours over 40 worked per employee per week

Employees Working Overtime

Number of employees regularly working overtime

Base Hourly Rate

Gross hourly pay (annual salary ÷ 2,080)

Overtime Rate

Pay multiplier for overtime hours

Weeks of Overtime Per Year

How many weeks per year this overtime level is sustained

The Formula

Overtime Cost = Hours × (Base Rate × Multiplier) × Employees × Weeks

In plain English

Annual overtime cost = overtime hours × overtime rate × employees × weeks. Compare to annual salary of a new hire.

Worked Example

8h × 5 employees × $75/hr × 20 weeks = $60K overtime pay. Vs. $104K annual salary → 0.58 FTE equivalent.

When to Hire vs Use Overtime

Overtime makes sense for short bursts (1–4 weeks) during product launches, deadline crunches, or seasonal peaks. Beyond 4–6 weeks of sustained overtime, the hidden costs (productivity decline, errors, turnover risk) make hiring the better financial and human decision.

The break-even calculation: if annual overtime cost approaches the fully-loaded cost of a new hire, the business case for hiring is clear. Beyond that, overtime is costing you more than the hire would.

1–4 weeks

Sustainable overtime duration

25–50%

Productivity decline after 4+ weeks overtime

1.5×

Standard overtime premium in most jurisdictions

6 weeks

Typical tipping point: hire vs. overtime

Overtime Duration vs Impact

Duration	Productivity Impact	Burnout Risk	Recommendation
1–2 weeks	Minimal	Low	Acceptable short-term
3–4 weeks	−10–20%	Moderate	Plan to reduce
5–8 weeks	−25–40%	High	Hire or cut scope
8+ weeks	−40–60%	Very high	Immediate action

Source: Stanford Research on Overtime Productivity · OSHA Fatigue Research Summary 2024

Common Mistakes

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Not tracking sustained overtime separately from occasional spikes

One week of crunch is fine; 10 weeks is a structural problem. Track average overtime hours per week and flag when it exceeds 6 hours/week sustained for more than 4 consecutive weeks.

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Calculating cost only on premium hours

Overtime at 1.5× feels like only a 50% premium on extra hours. But if those extra hours have 30% lower productivity (tiredness, errors), the effective cost per unit of output is much higher than 1.5×.

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Treating salaried employees as free overtime

Salaried exempt employees have no legal premium obligation in many jurisdictions, but their overtime still costs you: reduced productivity, burnout, and turnover. The cost is deferred, not absent.