Burdened labor rates refer to the full wages plus overhead costs and any other fees you pay directly to an employee who works for your business. The rate takes into consideration salary, taxes and benefits. Unburdened labor rates are associated with money you pay as salary only to your employee. It typically does not include benefits, taxes and any other fees you pay to keep a person in your employment.
Unburdened labor is easy to figure out for your employee. You need to only know how much you pay for the person's base salary to calculate his pay rate. An unburdened labor rate will be significantly less than a burdened type because employee-related expenses are not included in the figures. The unburdened labor rate will be the basis for your burdened labor rate calculations as well.
To figure out unburdened labor rate, you are required to know how much you pay for the employee's gross annual salary. If you are using the unburdened rate to figure out how to bid on a project that will use your employee and you pay a salary, divide the annual gross salary by 52 to get the gross paid to the employee on a weekly basis. Divide this number by 40 to calculate the unburdened hourly rate for the employee.
For burdened labor rates, you are considering the total cost of hiring an individual to work. The burden labor rate is calculated by considering the total burden that is associated with the employee’s wages. The burden includes payroll taxes and benefits paid by the employer to have the employee work for him.
To calculate the burden labor rate for an individual, you must know how much is paid annually for payroll taxes and benefits along with the base salary earnings. Once you know these figures, you apply the calculations to a single dollar. For instance, if $30,000 is paid towards overhead costs and the employee makes a total of $100,000 annually, the burden labor rate is $0.30.