Employer Payroll Cost Estimator
Standard Formula
Total Cost = Gross Overtime Pay + Employer FICA (7.65%) + FUTA/SUTA (3%) + Workers Comp (1.5%)
Accounts for total employer payroll costs including matching Medicare, Social Security, and unemployment taxes.
How Employer Payroll Cost Estimator Works?
The Employer Payroll Cost Estimator works by adding an employer burden percentage on top of gross overtime pay. The default 10.5% combines FICA (7.65%), unemployment (about 1.35%) and workers’ compensation (1.5%).
1Enter the hourly rate
Type the employee’s base wage, $25.00 by default.
2Enter overtime hours
Add the overtime hours, 10 by default.
3Enter the burden rate
Type the combined employer tax and insurance rate, 10.5% by default.
4Read the true cost
$375.00 gross + $39.38 burden returns $414.38, or $41.44 per overtime hour.
Employer Payroll Cost Estimator Formula
The Employer Payroll Cost Estimator formula is Total Cost = Gross OT Pay × (1 + Burden Rate).
Gross overtime pay
Gross = Rate × 1.5 × OT Hours
Employer burden
Burden = Gross × Burden Rate
Total employer cost
Total = Gross + Burden
- Burden Rate
- Employer taxes and insurance as a percent of wages.
- Gross
- Overtime wages paid to the employee.
- Total
- Full employer cost.
Worked example: 15% burden
20 overtime hours at $30.00 = $900.00 gross. Burden = $135.00.
Total = $1,035.00 ($51.75 per overtime hour).
Employer Payroll Cost Estimator Conversion Table
The Employer Payroll Cost Estimator conversion table shows the true cost of 10 overtime hours at $25.00 ($375.00 gross) for 6 burden rates.
| Burden Rate | Burden Amount | Total Employer Cost | Cost per OT Hour | Cost as Multiple of Base |
|---|---|---|---|---|
| 7.65% | $28.69 | $403.69 | $40.37 | 1.61× |
| 9% | $33.75 | $408.75 | $40.88 | 1.64× |
| 10.5% | $39.38 | $414.38 | $41.44 | 1.66× |
| 12% | $45.00 | $420.00 | $42.00 | 1.68× |
| 15% | $56.25 | $431.25 | $43.12 | 1.72× |
| 20% | $75.00 | $450.00 | $45.00 | 1.80× |
What is Employer Payroll Cost Estimator?
An Employer Payroll Cost Estimator is a tool that shows the full employer cost of overtime, beyond the wages paid.
The burden has 3 main parts: employer FICA (7.65%), federal and state unemployment taxes (FUTA is 0.6% on the first $7,000 per employee after state credits; state rates vary), and workers’ compensation insurance (from under 1% for office work to over 10% for roofing).
Benefits such as health insurance and paid leave are usually fixed costs that overtime hours do not increase.
What are the uses of Employer Payroll Cost Estimator?
There are 4 main uses of the Employer Payroll Cost Estimator.
True cost pricing
Owners see that a $37.50 overtime hour costs $41.44.
Bid pricing
Contractors add burden to overtime labor in quotes.
Profit margins
Finance teams test margins on overtime-heavy jobs.
Staffing decisions
Managers compare full overtime cost with temp labor rates.