Compare job offers and the hours behind them
Is a salary offer better than hourly pay with overtime?
An annual salary and an hourly rate describe different parts of an offer. A useful comparison includes expected overtime, paid leave, employer benefits, employee costs, and the hours you will actually work.
This tool models the pay terms you enter. The salary side assumes a fixed expected annual amount without separately calculated overtime; it does not decide whether a salaried role is legally exempt. The hourly side assumes one base rate and one overtime multiplier.
How to use this tool
Enter the salary you expect to receive
Use the actual annual cash amount, including any reduction you already expect for unpaid leave or a partial year.
Separate paid and worked weeks
Count paid leave in hourly paid weeks. Count only weeks worked when estimating overtime and time spent at work.
Value the complete offers
Enter employer-paid benefits and employee costs once, then add optional effective tax assumptions.
Test the overtime assumption
Compare no overtime, the expected schedule, and a busier schedule. Check that the required hours are available and acceptable.
Example: $80,000 salary versus $35 per hour
Assume both offers provide $12,000 in employer benefits, require $3,000 in annual employee costs, and have a 25% combined effective tax rate. The salary offer has $69,000 of modeled annual cash plus benefits.
The hourly offer pays 40 regular hours for 52 weeks, plus 5 overtime hours at 1.5 times the base rate during 48 worked weeks. Regular pay is $72,800 and overtime pay is $12,600, producing $85,400 gross and $73,050 of cash-plus-benefits value. The hourly offer leads by $4,050.
How much overtime closes that gap?
In the $80,000 versus $35 example, equal benefits, costs, and tax rates mean hourly gross pay must reach $80,000. The $7,200 gap above regular pay takes about 2.86 overtime hours per worked week at $52.50 for each overtime hour over 48 worked weeks.
At the entered five-hour overtime schedule, the gross base rate needed to match the salary package is about $32.79. Both break-even figures are rounded; the actual payroll result depends on payable hours, timing, and compensation rules.
Example: paid leave changes annual pay, not worked hours
At $35 per hour, 40 regular hours, 46 worked weeks, and no overtime, 46 paid weeks produce $64,400 gross. If the offer instead pays 52 weeks, including six weeks of paid leave, regular gross pay is $72,800.
That is $8,400 more gross pay with the same 1,840 hours actually worked. Do not also add $8,400 to employer benefits. On the salary side, the annual amount already includes the paid leave built into that offer.
Why effective hourly value can change the decision
A salary of $80,000 spread across 45-hour weeks and 48 worked weeks is about $37.04 gross per worked hour. At 55 hours for the same 48 weeks it falls to about $30.30, even though annual salary has not changed.
Consider predictable schedules, commute time, on-call demands, and whether overtime is optional. Those factors can matter more than a small annual-dollar lead.
Overtime eligibility is a separate question
Federal overtime generally applies to covered, nonexempt employees after 40 hours worked in a workweek, at at least one and a half times the regular rate. Being paid a salary by itself does not establish an exemption. Duties, pay practices, applicable exemptions, and state rules require their own review.
The regular rate for legal overtime calculations can include more than a stated base wage. This offer comparison does not calculate fluctuating-workweek pay, multiple rates, daily overtime, commissions, shift premiums, or bonus adjustments.
Tax assumptions and benefit values
The entered effective rate combines income and employee payroll taxes into one planning percentage. Set both rates to zero to compare gross pay and benefits before taxes. This is not a withholding calculator and does not compute any special deduction for overtime compensation.
Employer benefits are your annual dollar valuation, not necessarily cash or taxable income. Employee costs are modeled as after-tax cash expenses; any actual pretax treatment should be reflected in a carefully chosen tax assumption.
Offer-planning estimate, not a payroll calculation or a determination of overtime eligibility. Confirm the actual pay agreement, overtime availability, exemption status, benefit eligibility, and applicable federal and state rules.
Sources and further reading
- U.S. Department of Labor: Overtime pay requirements — Workweek overtime requirements and regular-rate context.
- U.S. Department of Labor: Salary basis and exemptions — Why salary alone does not determine exempt status.
- U.S. Department of Labor: Regular rate of pay — Compensation included or excluded from the legal regular-rate calculation.
Frequently asked questions
Is salary divided by 2,080 enough to compare offers?
That converts annual salary to a gross rate at 40 paid hours for 52 weeks. It does not compare actual worked hours, overtime, unpaid time, benefits, or employee costs.
Does a salaried job automatically lose overtime protection?
No. Salary alone does not decide overtime eligibility. This tool assumes the fixed annual pay you enter; confirm the actual role’s classification and pay rules separately.
Should overtime be included during paid vacation?
This model pays regular hours during paid leave and counts overtime only in worked weeks. If an employer guarantees other pay during leave, the offer needs a separate adjustment.
Are break-even overtime hours additional to my entered overtime?
No. The result is the total weekly overtime needed at the entered hourly rate and worked weeks. Compare that figure with the overtime you already entered.
Why can a higher hourly offer have lower annual value?
Fewer paid weeks, fewer paid hours, lower employer benefits, greater employee costs, or a higher assumed effective tax rate can outweigh the stated hourly rate.