Overtime premium is the extra pay a worker earns for hours past 40 in a workweek. A project manager who puts a crew on 50-hour weeks to recover schedule buys those extra hours at a higher rate than the first 40. Payroll pays that premium every week, and the estimate and the job cost report need it as a separate line to show what the extra hours cost.
This post builds the cost of an extended workweek from the federal overtime rules. The worked examples cover a single wage rate, a worker on two rates in the same week, and a prevailing wage job.
What the rules say
The Fair Labor Standards Act sets the floor. Under 29 CFR 778.107, overtime must be paid at no less than one and one-half times the employee’s regular rate. For an hourly worker on a single rate, 29 CFR 778.110 says the hourly rate is the regular rate, and the employee earns straight time for every hour plus one-half the hourly rate for each hour over 40.
The regulation’s own example uses a $12 rate and a 46-hour week. That comes to $588: 46 hours at $12, plus 6 hours at $6.
Splitting pay this way matters for job costing. Every hour on the timecard carries the straight-time rate. Only the hours past 40 carry the half-rate premium, and that premium buys no additional work.
A worked example
The figures below are an example with round numbers. A carpenter earns $40.00 an hour. The table prices one week at four schedule lengths, and the last column adds the employer’s 7.65% for Social Security and Medicare. The IRS sets the employer share at 6.2% for Social Security, on wages up to $184,500 in 2026, and 1.45% for Medicare with no wage limit. Both apply to the premium as well as straight time.
| Hours worked in the week | Straight-time wages ($) | Overtime premium ($) | Total wages ($) | Wages per hour worked ($) | Premium share of wages (%) | Wages plus employer Social Security and Medicare ($) |
|---|---|---|---|---|---|---|
| 40 | $1,600 | $0 | $1,600 | 40.00 | 0.0 | 1,722.40 |
| 45 | $1,800 | $100 | $1,900 | 42.22 | 5.3 | 2,045.35 |
| 50 | $2,000 | $200 | $2,200 | 44.00 | 9.1 | 2,368.30 |
| 60 | $2,400 | $400 | $2,800 | 46.67 | 14.3 | 3,014.20 |
On a 50-hour week, the carpenter earns $2,200. Divided by 50 hours worked, that is $44.00 an hour, 10% above the base rate. At 60 hours the average rises to $46.67, and premium makes up 14.3% of the week’s wages.
Scale that to a crew. Ten carpenters on 50-hour weeks for eight weeks earn $176,000 in wages, and $16,000 of it is premium. An estimate or a recovery schedule priced at the $40.00 base rate misses that $16,000 before any burden is added.
The labor burden post covers the other items that ride on wages. Some apply to premium dollars and some do not. Check each line of your burden with your payroll provider and insurance carrier before applying one burden rate to every overtime dollar.
Two rates in one week
A worker who does carpentry part of the week and laborer work the rest has two rates. Under 29 CFR 778.115, the regular rate for that week is the weighted average: total straight-time earnings at all rates, divided by total hours worked. The regulation names a few exceptions that allow other methods.
| Line | Hours | Rate ($) | Amount ($) |
|---|---|---|---|
| Carpentry | 30 | 40.00 | $1,200.0 |
| Laborer work | 15 | 30.00 | $450.0 |
| Straight-time earnings | 45 | $1,650.0 | |
| Regular rate (earnings divided by hours) | 36.67 | ||
| Overtime premium (half the regular rate) | 5 | 18.33 | $91.7 |
| Total pay for the week | 45 | $1,741.7 |
In this example the worker logs 30 hours of carpentry at $40.00 and 15 hours of laborer work at $30.00. Straight-time earnings are $1,650 for 45 hours, so the regular rate is $36.67. The premium for the 5 overtime hours is half that rate, $18.33 an hour, or $91.67, and the week’s pay is $1,741.67.
The job cost report should split that premium across the cost codes the worker charged that week. A system that books all premium to whichever code happened to land after hour 40 puts the whole cost on one activity.
Prevailing wage jobs
Federal and federally assisted construction contracts carry an overtime clause in 29 CFR 5.5(b). It requires one and one-half times the basic rate of pay for hours over 40 in a workweek for laborers and mechanics on the contract work. A violation makes the contractor and the responsible subcontractor liable for the unpaid wages and interest, plus liquidated damages of $33 for each worker for each calendar day worked past the standard 40-hour week without the overtime pay.
The fringe benefit portion of the wage determination stays out of the overtime calculation. Under 29 CFR 5.32, a contractor’s fringe contributions, and cash paid in place of fringes, are excluded from the rate on which premium is computed. The rate can never fall below the basic hourly rate in the wage determination, and employee contributions to fringe plans stay in the rate.
Take a determination with a basic hourly rate of $40.00 and a fringe of $20.00, as an example. Each overtime hour carries a $20.00 premium, half of $40.00. Computing it on the $60.00 total would pay $30.00, which over 10 overtime hours adds $100 a week per worker. The Davis-Bacon fringe post covers how to credit plan contributions against the fringe.
What the BLS hours show
The Bureau of Labor Statistics (BLS) publishes average weekly hours for production and nonsupervisory employees in construction. The September 2026 figure is 40.0 hours, seasonally adjusted, and preliminary. Over the 12 months through September 2026 the monthly figure ranged from 39.8 to 40.4 hours. Average hourly earnings for the same group were $39.20 in September, also preliminary.
An average near 40 hours covers crews working short weeks and crews working long ones, so it says little about overtime on any one job. Your own payroll register gives the count that matters, overtime hours as a share of total hours by job.
Revisions and caveats
The BLS figures come from the monthly payroll survey. The two most recent months are preliminary and are revised in the following releases, and FRED lists the next update for November 6, 2026.
The examples cover federal rules only. State overtime laws and union agreements can set different premium rates and triggers, so check the rules that apply to each job before pricing overtime.
How to start on your jobs
Pull the last quarter’s payroll register for one active job and split labor cost into straight time and premium for each week. Divide premium by total wages to get the premium share, and compare that share with the labor productivity figures from the labor productivity post for the same weeks.
Before the next schedule recovery plan goes to the owner, price the added hours at the average rate per hour worked from the table, using your own wages and schedule. That figure, with burden on top, is the labor cost of the acceleration.