Employee Burden Calculator

Calculate the true cost of an employee including taxes and benefits.

Results Summary

Total Annual Cost: $0.00

Annual Burden Amount: $0.00

Labor Burden Rate: 0.00%

Effective Hourly Rate: $0.00

Understanding the Employee Burden Rate

The employee burden cost (also known as labor burden) is the total cost a company incurs to employ a person, over and above their raw take-home salary. Many business owners make the mistake of budgeting only for the base salary, but the true cost is typically 20% to 40% higher.

What is included in Labor Burden?

To calculate the "fully burdened" cost of an employee, you must account for several mandatory and optional expenses:

• Mandatory Payroll Taxes: In the US, employers must pay Social Security (6.2%) and Medicare (1.45%), totaling 7.65%.
• Unemployment Taxes: Federal (FUTA) and State (SUTA) unemployment taxes vary by state and claims history.
• Workers' Compensation: Insurance rates depend on the risk level of the job (e.g., construction workers cost more to insure than office staff).
• Health Insurance: Employer contributions to medical, dental, and vision plans.
• Retirement Benefits: Matching contributions to 401(k) or pension plans.
• PTO and Sick Leave: While paid as salary, these represent hours paid where no work is performed, increasing the effective hourly rate.

Example Calculation

If you hire an office manager for $60,000 per year:

• Base Salary: $60,000
• Payroll Taxes (7.65%): $4,590
• Health Insurance: $6,000
• 401k Match (3%): $1,800
• Workers Comp/Other: $1,200
• Total Cost: $73,590
• Burden Rate: 22.65%

In this scenario, for every dollar of salary you pay, you are actually spending an additional 22.6 cents in overhead. This is critical for pricing services and ensuring profitability.