Burdened labor rate

A burdened labor rate is what an employee costs you per hour: the wage plus the payroll taxes, insurance, benefits and other costs that come with employing them. It is the cost of an hour of labor, not the rate you charge a customer.

Example

Say a technician earns $28 an hour, and payroll taxes, workers' compensation and benefits add 30% on top. The burdened rate is $28 x 1.30 = $36.40 an hour. Pricing a 4-hour job on the $28 wage would undercount labor by $33.60.

Use the burdened rate as the starting point in the labor rate calculator. Your own add-on percentage depends on your payroll and insurance, so check it with your accountant.