Overtime and Busy Season: Keeping HVAC Labor Costs Under Control

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The short answer

Overtime is labor paid at a premium rate, usually time and a half, once a worker passes 40 hours in a week. During the summer rush, HVAC overtime can quietly eat your margin because you are paying a higher rate on your single largest expense. The goal is not to ban overtime. It is to track it, price for it, and use it on purpose, so a busy season builds your bank account instead of draining it.

Key takeaways

Overtime is paid at a premium, so every overtime hour costs more than a regular hour.
Unplanned, untracked overtime is where summer profit quietly disappears.
Some overtime is good business. The problem is overtime you never see coming or pricing for.
Watching labor as a percentage of revenue each week keeps it from getting away from you.

Why overtime is a margin issue, not just a payroll issue

Labor is usually your biggest cost. Overtime makes that cost more expensive per hour, right when you are running the most hours. If your pricing assumes regular-rate labor and half your busy-season hours are at the overtime rate, you are losing margin on a pile of jobs and calling it a good month because revenue looks strong.

This is the trap. High revenue plus uncontrolled overtime can produce a worse bottom line than a calmer month at regular rates. The only way to know is to track it.

When overtime is worth it

Overtime is not the enemy. In peak season, paying time and a half to finish a profitable changeout today beats turning the job away or losing the customer to a competitor. The math works when the job is priced with margin to spare and the overtime gets the revenue in the door. Overtime becomes a problem when it is constant, unmeasured, and baked into jobs you priced as if everyone worked a clean 40.

How to keep labor under control in the rush

Track overtime hours separately so you can see how much premium labor you are actually paying.
Watch labor as a percentage of revenue weekly during the busy months, not just at month end.
Price for peak-season reality, not for an idealized regular-rate week.
Schedule smart so overtime lands on high-margin work, not on small tickets and drive time.
Protect your techs from burnout, because a crew run into the ground in July is a crew that quits in August.

Overtime costs more per hour

Regular hour

1.0x

Overtime hour

1.5x

Frequently asked questions

Is overtime bad for HVAC contractors?

Not by itself. Overtime on well-priced, profitable jobs is good business. The problem is overtime that is unplanned, untracked, and applied to work you priced as if it were regular-rate labor.

How do I control labor costs in busy season?

Track overtime separately, watch labor as a percentage of revenue weekly, price for peak-season rates, and schedule overtime onto your highest-margin work.

How much should labor be as a percentage of revenue?

It varies by company and job mix, but the key is to know your target and watch for it creeping up during the rush. A rising labor percentage is an early warning.

Make the busy season pay

A packed summer should build your bank account, not drain it. 911 Bookkeepers tracks payroll and labor cost against revenue so you can see where the margin goes. Book a free books review at https://911bookkeepers.com or call (225) 274-6576.

This article is general information, not tax or legal advice. Confirm overtime and wage rules with a qualified professional.

Jeremy Brewer is the founder of 911 Bookkeepers LLC in Baton Rouge, Louisiana. He came up through the HVAC trade and works as a licensed paramedic in EMS. He is a Xero Certified Advisor. 911 Bookkeepers is built for the trades.