labor burden faq What Is Included in Labor Burden?

Labor burden are the costs that are added to every employee's paycheck that are added over and above the employee's wages.

Typically, these costs include:

US Labor Burden

  • Payroll taxes (e.g. FICA, FUTA, SUTA)
  • Worker's Compensation
  • Vacation Pay (if applicable to all employees)

Canadian Labor Burden

  • Payroll taxes (employer contributions)
  • EI
  • WSIB (Worker's Comp)
  • CPP
  • Vacation Pay (if applicable to all employees)

To calculate your labor burden, you want to divide the total burden by the total wages to get a percentage.

i.e. Total Burden Divided by Total Wages = Labor Burden %

The average labor burden is about 20%.  This means, on top of the hourly wage paid to the employee, the employer spends about 20 cents on every dollar on taxes, insurances etc. listed above.

Note:  Your labor burden may be different than the average.  Burden changes with company size, number of worker's comp claims, worker's comp class, state/provincial unemployment, and much more.  Consult your accountant or payroll professional for advice in determining your company's actual labor burden %.


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