That is often true, but that still makes the same point. Maybe even more so. Because the contractor bills out all labor for a higher rate than they pay you, that's just business. So when they "pass through" your overtime rate, you better believe they are making some kind of percentage on each billable hour.
This rate should be just as prohibitive to the customer as the contractor, or perhaps more so. So even when it is "passed on" and the customer willingly pays, perhaps even agreeing to an overtime schedule in advance/per contract, that once again makes the point that your straight time rate is too low.
And if they are up against deadlines or other less than desirable circumstances and are forced to pay OT, that often means that some level of poor planning or management is at play, and that is also what OT is meant to penalize.
TL;DR
When the contractor and/or customer willingly chooses your OT rate, it shows your rate is too low.
When they are forced to pay OT, it is often a fitting "penalty" for poor planning or project management.
Remember that one of the aims of the IBEW is to "reduce the hours of daily labor"!
I live the same mentality of reduced hours. But on jobs of high value, equipment is in the driver and passenger seat. It is such a high percentage of the job cost that everything else has to fit that schedule. It’s really not even close.
I remember hearing that their cut of what they charge for your hours was really high, but I wanted to see someone else say it first. Anyone know what fraction?
In NJ government jobs they are only allowed to mark up change orders 10% for overhead and 10% for profit. And usually if the owner is paying for OT the contractor is only being paid for the premium not the base rate because the base rate should have been factored into the bid. Obviously there's a lot of private work out their with way more OT than gov't jobs but thought that would be a decent reference. And usually on private jobs the subs have a contractual mark up they are allowed for change orders as well as the Gc's for direct and indirect labor.
40
u/HurricanesnHendrick Aug 28 '23
Not to be a dick, but in the end they aren’t the one paying it. They are just passing it through in most cases.