Compare the monthly cost of covering extra hours with overtime against hiring a part-time or full-time employee.
Monthly hours = weekly extra hours × 52 ÷ 12.
Overtime = hours × wage × multiplier × (1 + burden %).
New hire = hours × wage × (1 + burden %) + hiring cost ÷ expected months.
Payback = hiring cost ÷ monthly saving on the premium.
Benefits such as health coverage for a new employee may add to burden; include them in your percentage.
A warehouse needs 20 extra hours a week, about 86.7 hours a month. At $20 with 20% burden, overtime at 1.5× costs $3,120 a month. A part-time hire costs $2,080 plus $208 a month of hiring cost spread over a year, $2,288. Hiring saves about $832 a month and pays back in about 2.4 months.
Use it when the same overtime shows up week after week. At some point a new hire is cheaper, and spreads the load so existing staff are less tired.
Enter your own hiring and onboarding costs, or use the cost per hire and onboarding cost calculators first.
A machine shop needs 8 extra hours a week, about 34.7 hours a month, from a $24 an hour machinist with a 25% burden. Overtime at 1.5x costs $1,560.00 a month. A new hire costs $3,800 to recruit and train, and over an expected 6-month stay that adds $633.33 a month, bringing the hire to $1,673.33. Overtime is about $113.33 a month cheaper here, and hiring would only pay back after about 7.3 months.
Hiring cost is spread over the months you enter, so a short expected stay favors overtime and a long one favors hiring. Burden is applied the same to both options, but benefits often apply only to a new hire, so a benefits-eligible hire costs more than shown. The comparison also assumes the extra hours are steady every week; a short seasonal peak changes the answer.
Per hour yes, but hiring has upfront costs. The calculator compares both.
Long-term overtime raises fatigue and turnover risk, which the numbers do not show.
No. It is for non-exempt overtime.
Use the cost per hire and onboarding cost calculators.
It is the hiring cost divided by the overtime premium you save each month by paying straight time instead. If you expect the new hire to stay longer than that, hiring comes out ahead; if not, overtime may be cheaper.
The calculator assumes the new hire works only the extra hours, at straight time. If a new person would need a longer schedule than the gap you are covering, enter the hours you would really pay them.
More for the same job
Instead of adding up timesheets before you open the overtime vs new hire calculator, let EZTime total employee hours. Book a demo to see it with your team.