Extra cost defaults to 7.65%, the employer share of Social Security and Medicare. Add insurance and other costs by entering a higher percentage.
What it includes
Wages at your regular rate for regular hours, wages at 1.5 times for overtime hours, and an added percentage on top. The default is the employer half of Social Security and Medicare, 7.65% of wages.
The overtime premium is the extra half of the rate that you pay only because the hours were overtime. It is the part a schedule change can save.
Overtime or a new hire
Overtime costs 1.5 times the rate but adds no new payroll. A hire costs the regular rate for the same hours, plus recruiting, training and often benefits. The wage comparison here is the starting point, not the whole answer.
Overtime rules for the employee side are on the overtime calculator. Employer payroll tax rates come from IRS Topic 751.
How much does overtime cost an employer?
Overtime hours cost 1.5 times the regular rate, plus the employer share of Social Security and Medicare, which is 7.65% of wages. Ten overtime hours at $20 an hour is $300 in wages and about $323 with payroll tax.
Is it cheaper to pay overtime or hire another person?
It depends on the hourly rate you would pay a new hire and on costs this calculator leaves out, such as recruiting, training, benefits and workers compensation. Enter a hire rate to compare the weekly wage cost.
What payroll costs are not included?
Unemployment insurance, workers compensation, health benefits, paid leave and recruiting costs. Use the extra cost box to include a rate that covers them.