Ask ten contractors what their labor burden is on $10 of gross payroll and you will get ten different answers – and all ten will swear that their number is right!  Here is how we calculate it using the example of a commercial carpenter with a class code of 5403 :

$10.000          Gross Pay

$ 1.3270 (+)    Workman’s Compensation Rate: 13.27% charged by State Fund for the 5403 class code (2009 rates)

$   .0531  (+)    NYS assessment: charged on anyone working in “commercial”.  It is 4% of the workman’s comp premium.

$   .0690 (-)     Experience Modifier: ours is .95 so we save 5% of the comp premium.  Yours may be more or less.

$   .6925 (+)    Unemployment: Your rate could be as much as 9.25%

$   .0750 (+)    State Reemployment Service fund

$   .0800 (+)   Federal Unemployment (Form 940)

$   .0200 (+)    Disability Insurance

$   .7650 (+)    FICA:  This is the employers contribution to the Social Security fund and the Medicare fund

$   .7000 (+)    Liability Insurance:  What percent of your gross payroll is your liability premium?

$ 1.5000 (+)    Medical benefits, vacation days, sick days, 401k, and first aid costs.  Estimate this number based on previous years as a percentage of your gross payroll.

$   .2500 (+) The administrative cost to process all of the above.  If you have a few employees then this number could be as much as $1 or $2.  If you are a large employer, then this is likely less.

$15.4816          Burden is just over 50% or $5.33 of every $10 paid out.

How do you calculate burden??  Leave a comment here.

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