subcontractor temp labor temporary help seasonal help field labor faq Budget: Is temporary or temp labor field labor or a subcontactor?

Temporary (temp) labor should be considered labor and not a subcontractor.  The reason is the markup.  Temp labor is priced like labor... you might pay staff $15/hr for their labor, but you'd charge them to your customers at a high markup - something like $40/hr.

A subcontractor is used when markups are small.  For instance, your subcontractor charges you $1200 for a job, and you charge them to your customers for $1350.   Subcontractors typically have a small markup like 5%-20%.

TIP:  When entering temp labor, remember that the labor burden (payroll tax, workers comp, unemployment insurance, etc.) is likely already included in the hourly rate you pay the temp agency.  So, when entering temp labor, you should deduct the rate you're using for labor burden from the hourly wage of your temp staff so that you don't count on labor burden for temp help.

For example:

  1. Your temp labor agency charges you $15/hr for temp help and all payroll taxes etc. are included in that rate.  
  2. You entered 20% as your labor burden in your field labor budget
  3. Divide $15 by 1.20 (which is 1 + 20%) to get their labor rate before labor burden = $12.50
  4. Use $12.50 for your wage rate for temp labor in your field labor budget because your field labor budget will automatically add the labor burden (20%) on all field labor.  Now you'll be budgeting for the accurate $15/hr.


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