Overtime Rate Calculator Formula

Understand the math behind the overtime rate calculator. Each variable explained with a worked example.

Use the Overtime Rate Calculator

Formulas Used

Overtime Rate

overtime_pct = total_hours > 0 ? (overtime_hours / total_hours) * 100 : 0

Total Overtime Cost

overtime_cost = overtime_hours * avg_hourly_rate * overtime_multiplier

Overtime Premium (extra cost above regular)

premium_cost = overtime_hours * avg_hourly_rate * (overtime_multiplier - 1)

Variables

VariableDescriptionDefault
overtime_hoursTotal Overtime Hours120
total_hoursTotal Hours Worked (regular + overtime)8120
avg_hourly_rateAverage Hourly Rate(USD)25
overtime_multiplierOvertime Multiplier1.5

How It Works

How to Calculate Overtime Rate

Formula

Overtime Rate = (Overtime Hours / Total Hours Worked) x 100 Overtime Cost = Overtime Hours x Hourly Rate x Multiplier

Tracking overtime reveals whether you are understaffed or inefficiently scheduling. The overtime premium (the extra cost above base pay) directly eats into margins. Some overtime is expected during peak seasons, but persistent high overtime often signals the need for additional hires, which can be cheaper than sustained premium pay.

Worked Example

A team works 8,120 total hours including 120 overtime hours. Average hourly rate is $25 with 1.5x overtime pay.

overtime_hours = 120total_hours = 8120avg_hourly_rate = 25overtime_multiplier = 1.5
  1. 01Overtime Rate = (120 / 8,120) x 100 = 1.48%
  2. 02Overtime Cost = 120 x $25 x 1.5 = $4,500
  3. 03Overtime Premium = 120 x $25 x 0.5 = $1,500

Ready to run the numbers?

Open Overtime Rate Calculator