Labor Burden Rate

Labor burden rate (also called burden rate, fully burdened labor rate, or burdened labor rate) is the ratio of an employee's non-salary employment costs — payroll taxes, workers' compensation, and benefits — to their base salary, expressed as a percentage. It's the same underlying figure as a load multiplier, just framed as an add-on percentage instead of a multiple: a 35% burden rate and a 1.35x load multiplier describe an identical fully loaded cost.

The mandatory components (employer FICA at 7.65%, FUTA at an effective 0.6%, state unemployment insurance, and workers' compensation) are set by federal and state law and vary mainly by state and trade classification. Discretionary components — health insurance, retirement matching, paid time off — are set by the employer and explain most of the remaining spread between a lean startup's burden rate and a company with a rich benefits package.

Converting the annual burden rate to an hourly figure (the fully burdened labor rate, or fully burdened hourly rate) is the number that belongs in a bid, a client invoice comparison, or a make-vs-buy decision against a contractor's rate — not the base hourly wage alone.