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.

Example: In Missouri, here are additional costs that employers may incur when employers work overtime:

1. Social Security Tax 

• Rate: 6.2%
• Wage cap: Up to the annual federal Social Security wage base
• Employer matches the employee’s 6.2%
• Collected by the Internal Revenue Service

2. Medicare Tax

• Rate: 1.45%
• No wage cap
• Employer matches the employee’s 1.45%

❗ Employers do not pay the additional 0.9% Medicare tax on high earners

3. Federal Unemployment Tax (FUTA)

• Standard rate: 6.0% on the first $7,000 of wages per employee
• Typical effective rate: 0.6% (after Missouri state unemployment credit)
• Paid by employer only
  

4. Missouri State Unemployment Insurance (SUTA)

• New employer rate: Typically around 2.7% (can vary by industry)
• Taxable wage base: $11,000 per employee (Missouri-specific)
• Paid by employer only
• Administered by the Missouri Department of Labor and Industrial Relations
• Rate adjusts over time based on your claims history

5.   Workers Compensation 

• Premium based on gross salaries paid – Year end True Up
• Risk & Claim Severity: OT doesn’t just increase premiums — it increases risk:

• Fatigue = higher injury frequency
• Injuries late in long shifts are often more severe
• Claims during OT hours can increase loss ratios

This can drive rate increases beyond just payroll growth.

6.    Possible Benefit Costs Tied to Compensation

If benefits are salary-based, OT   may impact:

• Employer 401(k) match (if OT is included in eligible comp)
• Bonuses or commissions tied to total earnings
• Life & disability insurance premiums based on payroll
• Some paid leave accrual formulas

7.    401(k) employer contributions are often based on a % of their gross earnings.

Example employer match:  50% up to 6%   or    Employer contribution 3%

Now for the good news!

Make ShiftSub Your Plan B — Before Overtime Becomes the Only Option

Overtime shouldn’t be your emergency staffing strategy — it should be the exception. No-shows, call-ins, PTO, vacations, and medical leave aren’t surprises anymore; they’re a normal part of running a business. The real risk comes from not having a Plan B when they happen.

ShiftSub gives you that Plan B.

Instead of forcing managers to scramble, burn out your best employees, and absorb the true cost of overtime, ShiftSub allows you to build a flexible bench of pre-vetted workers who can step in when coverage gaps appear. That means fewer last-minute overtime decisions, more predictable labor costs, reduced risk, and smoother operations — even when the unexpected hits.

The most successful operations don’t eliminate challenges — they prepare for them.

Make ShiftSub your Plan B, so overtime doesn’t have to be.