How to Calculate Payroll Burdens


Payroll burdens are the cost of the employee during a payroll cycle. This cost includes employee benefits, employer insurance and employer taxes. Employer taxes include the matching Social Security and Medicare, Federal Unemployment and State Unemployment tax. Payroll burdens do not include the taxes paid by the employee, only the employer's portion.

Things You'll Need

  • List of employee's wage and benefit information
  • Workers Compensation Policy
  • Health and dental premiums by employee
  • Union benefit percents
  • Employer matching amounts
  • The calculation for payroll burden begins with the hourly wage of the employee. When calculating the burden for salaried employees, divide the annual wage by 2080 hours. These are the hours based on a 40 hours week: 52 weeks x 40 hours = 2080 hours.

  • Workers compensation insurance is based upon employee classification. Separate employees by classification and calculate the cost of each, or divide the premium amount by the total payroll dollars of the workers compensation insurance. For example, Premium $5,500 / Annual payroll of 100,000 = .055

  • Paid Holidays: divide the number of paid holidays by the number days worked annually. Use the number of weeks x 5. This is 52 weeks x 5 days = 260 days annually. For example, 10 holidays / 260 = .038

  • Vacation: divide the number of vacation days by the annual days worked. For example, 10 days / 260 = .038

  • Medical Insurance: Calculate the annual medical premium paid on behalf of the employee. Divide this by the annual wage. For example, 350 monthly x 12 = $4,200 divided by $55,000 = .076

  • Union employers have additional contributions for employer-paid union benefits. Calculate these using the above examples.

  • The percent for the federal employer tax is .0765. The Federal Unemployment is .008. The State Unemployment rate is assigned individually to the employer by the state. For this example, the rate given is .027.

  • Total the individual percents. Starting with Workers Compensation, .055 + .038 + .038 + .076 + .0765 + .008 + .027 = .3185, or 31.85%. Multiply the individual employee hourly wage times 31.85%. For example, $15.00 x .3185 = $ 4.78 hourly burden.

Related Searches


  • Photo Credit Hemera Technologies/ Images
Promoted By Zergnet



You May Also Like

  • What Is a Payroll Tax?

    When you get paid you don't get all the money your employer "owes" you. If you look at your paycheck stub, you'll...

  • How to Calculate Payroll Expenses

    Payroll expenses are a function of employee wages and payroll taxes. There are five main payroll taxes that must be reported and...

  • How to Calculate Burden Rate on Salaries

    The burden rate is a commonly used term used by human resources and finance professionals. It refers to the employees "burden" on...

  • How to Calculate a Material Burden Rate

    The material burden rate is the sum of a manufacturer's direct material expenses. It is also known as indirect production cost, factory...

  • How to Calculate Labor Burden

    Employers incur enormous expenses associated with maintaining a work force. Costs to employer workers include far more than simply wages, compensation, incentives...

  • What Is a Payroll Tax Rate?

    Federal and state law requires employers and workers to pay payroll taxes. A payroll tax rate is the formula federal or state...

  • Washington State Payroll Deductions

    Washington state does not have a personal state income tax, so unlike employers in most other states, Washington state employers are not...

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!