Worked example: a $75,000 office hire
Employer FICA is $5,738, FUTA $42, SUTA about $189, workers' comp $938, health benefits $6,600, 401(k) match $2,250, and overhead $6,000 — total burden $21,757, a 29% rate. The $75K employee really costs $96,757, and at ~1,880 productive hours that is $51.47/hour of breakeven labor cost before a dollar of profit.
- • Workers' comp is the wildcard: $0.40/$100 for clerical work, $10+ for roofing or trucking.
- • The same hire as a 1099 contractor at 1.3× salary often costs less but carries misclassification risk if controlled like an employee.
- • SUTA experience ratings reward low-turnover employers — claims history moves your rate.
FAQ
What is the average cost of an employee beyond salary?
Most US employers pay 1.2–1.4× the gross salary once taxes, benefits, insurance, and overhead are included. A lean shop with minimal benefits lands near 1.15×; a manufacturer with high workers' comp can exceed 1.5×.
What payroll taxes does the employer pay?
Matching Social Security (6.2% to the wage cap) and Medicare (1.45%, uncapped), FUTA (effectively $42/employee/year after the state credit), and SUTA (rate varies by state and claims history). Employees do not see these on their paystub.
How is workers' comp calculated?
Per $100 of payroll by job classification code. Clerical runs under $1; construction and trucking run $5–$15+. Your experience modifier then raises or lowers the premium based on claims.
Is it cheaper to hire a 1099 contractor?
On paper you skip FICA match, unemployment, WC, and benefits — but only if the worker genuinely qualifies as independent. Misclassification penalties include back taxes, interest, and fines; when in doubt, use the IRS behavioral/financial control tests.
How this calculator is built
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Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
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