OVERTIME AND COMPENSATORY TIME

4. Cost of Hiring New Employees
OBSERVATION
There has been a common belief that because of the high cost of benefits, it is
less costly for the current employees to work the necessary overtime rather than
hire new employees. An analysis was performed on a few select positions taking
into consideration the costs for current employees for 2008 and the overtime
worked and then comparing that to hiring a new employee to work this overtime.
The average cost of employee benefits for health insurance, life insurance and
retirement costs for each employee is $13,120 and $16,116 for 2008 and 2009
respectively. Social Security and Medicare costs of 7.65% of wages paid and
worker’s compensation insurance costs (range from .31% to 4.85% for 2008 and
.5% to 6.9% for 2009 on total wages paid) must be added to the above employee
benefits’ cost to arrive at the total cost of hiring employees. The Social Security
and Medicare costs along with the worker’s compensation insurance costs are
calculated on all wages paid and continue as an expense on overtime wages
paid.
Analysis revealed that there is a potential for cost savings by hiring new
employees in situations where there is a high enough volume of overtime in total
for the department within job positions in department such as the Prison, the
Sheriff’s Department and possibly Gracedale. This actual savings is dependent
on many factors among which are the status of department vacancies, ability to
fill vacancies, current staffing requirements, necessity and ability to fill daily voids
due to staff leave time taken, the actual overtime that will be required, and the
current level of staff seniority.
Specific employees from the Prison and Gracedale who were among the top
wage earners for 2008 and their actual overtime hours were analyzed. In the
case of the Prison employee, enough overtime hours were worked to justify
hiring another employee at a potential cost savings of up to $26,600. See
Attachment 1, page 20. In the case of the Gracedale employee, overtime worked
did not justify hiring another employee. However, if there were 2 current
employees in the same position at Gracedale with similar overtime hours to the
individual in our analysis, it would have presented a situation in which hiring an
employee to work the overtime of those 2 employees could have saved the
County up to $43,933. See Attachment 2, page 21.
RECOMMENDATION
It would benefit the County to take a look at the departments with the highest
volume of overtime hours to determine the exact savings that could occur with a
redistribution of staffing and hiring new employees.
MANAGEMENT RESPONSE
John Stoffa, County Executive
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