Employee Burden Rate: What Your Technicians Actually Cost Per Hour

Your tech earns $28/hr. His actual cost to you is closer to $38–42/hr once you add what you pay on top of his wages. That gap matters for two reasons: it affects whether your billable rate covers your labor cost, and it changes the math on whether adding headcount makes sense at your current pricing.

What Burden Rate Includes

Burden rate is the total employer cost of an employee beyond their base wage. It includes:

• FICA (Social Security + Medicare) — 7.65% of gross wages, paid by the employer in addition to the employee's share
• FUTA/SUTA — federal and state unemployment taxes, typically 3–6% on the first $7,000–$10,000 of wages
• Workers' compensation insurance — varies dramatically by trade classification and state; electrical work runs 6–12% of payroll, roofing can be 20%+
• Health insurance — if you provide it, your contribution (not the employee's) goes into burden
• Paid time off — vacation, sick time, and holidays represent wages paid for non-billable hours, which effectively increases the burden on billable hours
• Tools and PPE — if you provide trade tools, add the annual cost divided by labor hours

Calculating Burdened Hourly Cost

Take the base wage and add each burden component as a percentage or fixed cost per hour:

• Base wage: $28.00
• FICA (7.65%): $2.14
• Workers' comp (9%): $2.52
• FUTA/SUTA (3%): $0.84
• Health insurance ($300/mo / 160 hrs): $1.88
• PTO adjustment (10 days / 250 work days = 4%): $1.12
• Burdened total: ~$36.50/hr

That $36.50 is your actual cost for one hour of labor. Your billable rate must cover this plus overhead per billable hour plus profit margin.

Burden Rate and Overtime

Overtime hours cost more than 1.5× base wage. At 1.5× base of $28 = $42/hr, plus the same FICA and workers' comp burden (percentages still apply to gross wages), an overtime hour can run $54–58. If you're billing overtime hours at the same rate as regular time, you may actually be losing margin on those hours.

Use the Employee Burden Rate Calculator to calculate your tech's actual cost per hour. Enter base wage, tax rates, workers' comp class, and benefit costs — and see the true number you need to cover in your billing rates.