| And I am not talking about the actual time and cost of | | | | would be: 10 days vacation + 5 days sick + 8 holidays |
| getting your employees paid, but all those costs often | | | | = 23 paid non-working days. $800/5 days = $160 per |
| not considered when providing a customer an | | | | day paid wages. $160 x 23 non-working days = $3,680 |
| estimate or proposal or not included in budgets and | | | | (yearly cost of non-working days). There are 260 |
| financial planning. | | | | possible working days in the year (52 x 5) less the 23 |
| The cost burden of payroll includes all expenses | | | | non-working days = 237 working days. These 237 |
| incurred over and above an employee's wage. To get | | | | working days need to be burdened with the cost of |
| to the true hourly cost of an employee you need to | | | | the 23 non-working paid days. Divide the expense of |
| take these into consideration. The employer's share of | | | | the non-working days by the number of working days |
| FICA, Medicare, and State and Federal unemployment | | | | ($3,680/237) which is $15.53 per day. Divide the $15.53 |
| taxes are common examples of payroll burden, | | | | by 8 hours and you have your hourly burden cost for |
| however there are others to include in your payroll | | | | paid days off. Depending on your company you may |
| costs. | | | | have employees working overtime or even less than a |
| Workman's compensation and part of your general | | | | 40 hour week occasionally. Unless you think this may |
| liability insurance premiums are based on wages paid. | | | | affect your burden substantially you can base your |
| These rates vary from state to state as well as job | | | | figures on the "usual order of business". |
| classification and these costs are part of your payroll | | | | Other expenses you should consider are health, dental, |
| burden. You can find out the cost of the premium per | | | | and/or disability insurance premiums paid by the |
| wage dollar paid from your insurance agent. | | | | company (net of employee contributions). And if you |
| The cost of paid vacation, sick, personal and holidays | | | | are providing a vehicle to your employee the cost of |
| should also be included in the cost of payroll. To do this, | | | | purchasing, financing and insuring that vehicle may be |
| determine the number of paid days off an employee is | | | | an expense to include. Also any other employee |
| entitled to and multiply that number by the employee's | | | | benefit cost that the company provides should be |
| average daily wage. Then divide by the number of | | | | considered as part of the payroll burden charge. |
| working days in a year (for example - 52 weeks less | | | | When all is said is done, the wage you pay your |
| 2 weeks vacation equals 50 working weeks). And | | | | employee for a day's work is just the beginning of the |
| then divide by the average number of hours worked in | | | | cost of that employee. Not determining the cost of |
| a week resulting in an average hourly cost of paid time | | | | your payroll burden can shave profits from your |
| off. For example an employee paid $800.00 per a 40 | | | | bottom line. And without profits we can not continue to |
| hour week with two weeks paid vacation, 1 week of | | | | stay in business. |
| paid sick leave and eight paid holidays computation | | | | |