And it is costing you much more than 1.5x the hourly wage.

Overtime often feels like the fastest and easiest solution. An employee works a longer shift, gets paid time-and-a-half, customers stay happy, and the problem is solved — at least for the day.

But the reality is this: overtime costs employers far more than 1.5× hourly pay, especially when it becomes the default response to no-shows, call-ins, PTO, vacations, or medical leave.

In Missouri, the true cost of overtime quietly stacks up in ways many employers don’t fully calculate.

The Real Cost of Overtime in Missouri

When an employee works overtime, you’re not just paying extra wages — you’re paying additional employer-side taxes and costs tied directly to higher earnings.

Employer-paid payroll costs include:

• Social Security Tax: 6.2% (employer match)
  
• Medicare Tax: 1.45% (employer match)
  
• Federal Unemployment Tax (FUTA): ~0.6% on the first $7,000 of wages
  
• Missouri State Unemployment (SUTA): ~2.7% on the first $11,000 of wages (varies by industry and claims history)
  

That means every overtime dollar is immediately inflated by another ~11–13% in payroll taxes alone.

Workers’ Compensation: The Risk Multiplier

Overtime doesn’t just increase payroll — it increases risk.

• Fatigue leads to more frequent injuries
  
• Injuries during extended shifts are often more severe
  
• Claims during overtime hours can raise loss ratios
  

At year-end, workers’ compensation premiums are “trued up” and can be based on gross payroll.  In addition, higher claims tied to overtime can drive future rate increases, not just higher premiums this year.

Benefits Costs That Quietly Rise with Overtime

In some cases, employee benefit premiums are tied to earnings which overtime inflates.  Overtime can also increase:

• 401(k) employer contributions (commonly 3%–6% of gross pay)
  
• Life and disability insurance premiums based on payroll
  
• Bonuses or commissions tied to total earnings
  
• Paid leave accruals calculated on hours or wages worked
  

For example, a standard 50% employer match up to 6% or a flat 3% contribution becomes significantly more expensive when overtime becomes routine.

How Operations Managers Get Trapped

Most overtime problems start with more than just poor planning, the biggest cause is no backup plan.

• An employee calls in sick
  
• Someone doesn’t show up
  
• PTO, vacation, or unpaid time off overlaps
  
• A team member goes on medical leave
  

Without a “Plan B,” operations managers are forced into a corner where overtime becomes the only way to meet customer demand, protect service levels, and keep doors open.

Over time, this creates a cycle where:

• Overtime becomes expected
  
• Payroll becomes unpredictable
  
• Burnout increases
  
• Risk rises
  
• Costs quietly compound
  

The Bigger Picture

Overtime isn’t just a payroll issue — it’s an operational strategy issue.

Employers who rely on overtime as a primary coverage solution are often paying far more than they realize while increasing risk to their people, their margins, and their long-term stability.The real question isn’t “Can we afford overtime?”
It’s “Can we afford to keep operating without a plan when it happens?”