Staffing overtime: check the payroll cost your client rate leaves uncovered

A client can request extra coverage at an ordinary bill rate while the staffing firm incurs overtime pay. The placement may still show a healthy spread between its basic pay and bill rates, even though the additional shift contributes almost nothing after payroll costs. Review the overtime economics before treating more hours as better business.

This guide uses a U.S. federal overtime example for a covered, nonexempt employee. Classification, state or local law, collective agreements, and the employment arrangement can change the analysis. Have payroll establish the applicable treatment first. The client's willingness to pay a premium does not determine the employee's wage entitlement.

DOL's FLSA guidance applies the ordinary overtime test on a workweek basis and does not permit averaging hours over multiple weeks. A staffing employee can work fewer than 40 hours for each client but exceed 40 across assignments for the same employer. A client-by-client spreadsheet can therefore miss the premium entirely.

Retain the fixed workweek, dated hours, assignment, and effective pay rates. DOL's recordkeeping guidance calls for daily and workweek hour records. Use those records to find overlaps, late time entries, and corrections before evaluating the week's pay. A scheduled shift is useful planning data; the actual working record is needed for the final calculation.

Identify whether the client pays a premium after a daily or weekly threshold, for named shifts, for holidays, or only after specific approval. Record the rate and the hours to which it applies. A purchase order for additional hours may authorize spending without changing the bill rate. Keep both the assignment terms and later written changes.

Bullhorn's operational documentation treats pay and bill evaluation as separate rule outputs. That separation should also exist in the commercial review. Check a sample overtime week from source time through both calculations, including any difference between the employer's workweek and the client's reporting cycle.

Assume a hypothetical employee earns a straight-time rate of $25 and works 44 hours for one staffing employer. Assume the ordinary federal overtime calculation applies, no other regular-rate inputs or special rules apply, and the client pays $38 for every hour. Straight-time earnings for 44 hours are $1,100, plus a $50 overtime premium for the four excess hours, giving $1,150 gross pay.

Client billing is 44 times $38, or $1,672. The difference before employer taxes, insurance, benefits, and other costs is $522. At 40 hours, the same comparison would be $1,520 billed less $1,000 paid, or $520. The extra four hours add only $2 to that initial spread.

If the client instead agrees to $57 for those four hours, total billing becomes $1,748 and the pre-burden spread becomes $598. That is an additional $76 of billing under the stated hypothetical terms. These figures are not market rates or a recommendation for a universal markup; they show why the specific premium clause matters.

Different straight-time rates within a workweek can require a weighted-average regular-rate calculation under the ordinary FLSA method. Other compensation may also affect the calculation, and specified exceptions exist. Give payroll the complete earnings record rather than assuming the rate on the last assignment controls every overtime hour.

Then include the employer costs used in the firm's margin definition. Explain whether payroll taxes, workers' compensation, benefits, and other assignment costs are actual amounts, estimated rates, or excluded. Comparing a wage-only overtime spread with a fully loaded ordinary-hour margin creates an attractive but misleading result.

Give the account manager a clear escalation point when proposed coverage changes the pay calculation or exceeds an agreed client budget. Possible commercial responses include a revised premium, different staffing coverage, or a deliberate decision to accept a lower contribution. Record who approved the decision and which customer commitment supports it.

After payroll and billing close, compare the forecast premium with the actual result. Investigate late hours and rate overrides, then correct both pay and bill records where needed. Never resolve an unfavorable client margin by withholding compensation that is due. The useful outcome is a better commercial decision supported by an accurate payroll record.