How to Calculate Overtime and Labor Burden for a Construction Crew
A worker paid $28 an hour costs you more than $28 an hour. Between overtime and labor burden, contractors who bid on the bare wage often lose money on labor without realizing it.
1. Overtime under federal rules
Under the US Fair Labor Standards Act, non-exempt employees must be paid at least 1.5× their regular rate for hours over 40 in a workweek. The workweek is a fixed, recurring 7-day period, and each week stands alone: you can't average two weeks together. Some states add their own rules, such as daily overtime in California. Check the rules for your state, plus prevailing-wage rules on public jobs.
Example: 46 hours at $28 = 40 × $28 + 6 × $42 = $1,120 + $252 = $1,372.
2. Track hours by worker and by job
Overtime is calculated per worker per week, but the cost belongs to jobs. If a carpenter works 30 hours on Job A and 16 on Job B, decide how you'll assign the 6 overtime hours, either proportionally or to the job that caused them, and do it the same way every time.
3. What labor burden includes
- Employer payroll taxes: Social Security and Medicare (7.65% combined on wages up to the Social Security wage base), plus federal and state unemployment taxes
- Workers' compensation insurance. Rates vary a lot by trade class and state.
- General liability premiums based on payroll, if yours are
- Benefits: health insurance, retirement contributions, paid time off and holidays
- Optionally, tools, phones and vehicles you provide
4. Calculate the burden rate
Burden rate = annual burden costs ÷ annual wages. If wages are $200,000 and taxes, comp, insurance and benefits total $56,000, the burden rate is 28%. That figure is an illustration; yours depends on your trade, state and benefits.
Loaded hourly cost = wage × (1 + burden rate). At 28%, a $28 wage costs about $35.84 an hour, and overtime hours cost more again.
5. Use the loaded rate everywhere
Use the loaded rate in your bids (how to write a contractor bid) and when posting labor to jobs (construction job costing). Recalculate it when insurance renews or wages change.
Our Crew Timesheet Spreadsheet for Contractors (Excel and Google Sheets) takes weekly hours per worker and job and calculates weekly overtime and labor cost by job, with a burden rate tracker.
General information, not legal, payroll or tax advice. Confirm overtime rules with your state labor department and the US Department of Labor.
Crew Timesheet Spreadsheet for Contractors: instant download for Excel and Google Sheets.
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