Field labor burden refers to the cost of payroll expenses over and above the employee's raw wages. Typically, labor burden would include:
- Payroll taxes (employer's contributions only)
- Workers compensation (employer's contributions only)
- Unemployment insurance (employer's contributions only)
Note that there may be other payroll expenses in your state/country/region over and above those listed. Some other examples might include things like:
- Mandatory vacation pay
- Health care benefits
... but the expense should only be considered Field Labor Burden if it pertains to all employees. (other expenses that only pertain to a few key employees should get entered as an overhead expense)
HINT: Talk to your payroll professional to make sure you are calculating your labor burden expenses accurately.
Once you've identified the costs that you should treat as labor burden, then this formula will help you calculate your labor burden percentage.
Costs of Labor Burden (e.g. payroll tax, workers comp, UI)
Total Wages (straight wages, no burden costs)
The "normal" labor burden differs greatly from country to country and even from state-to-state, but labor burden typically averages somewhere between 13% and 25%, depending on where you're from. If you're outside that range, we recommend consulting your bookkeeper or payroll professional to make sure you're calculating your burden correctly.