Burden Rate

AAA

DEFINITION of 'Burden Rate'

Indirect costs associated with employees, over and above gross compensation or payroll costs. Typical costs associated with the burden rate include payroll taxes, worker's compensation and health insurance, paid time off, training and travel expenses, vacation and sick leave, pension contributions and other benefits. The burden rate provides a truer picture of total labor costs than payroll costs alone.

INVESTOPEDIA EXPLAINS 'Burden Rate'

Many of the costs associated with the burden rate are hidden costs that are not readily apparent. Since total labor costs, including the burden rate, may be as much as 50% higher than payroll costs alone, it is necessary to calculate the burden rate accurately to get a better picture of profitability.

RELATED TERMS
  1. Group Health Insurance Plan

    An insurance plan that provides healthcare coverage to a select ...
  2. Employee Savings Plan

    A pooled investment account provided by an employer that allows ...
  3. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  4. Payroll Tax

    Tax an employer withholds and/or pays on behalf of their employees ...
  5. Portable Benefits

    Benefits that have been paid into or accrued in an employer-sponsored ...
  6. Book Value Reduction

    Reducing the value at which an asset is carried on the books ...
Related Articles
  1. Payroll Deductions Pay Off
    Retirement

    Payroll Deductions Pay Off

  2. Small Business Tax Obligations: Payroll ...
    Taxes

    Small Business Tax Obligations: Payroll ...

  3. What is Globalization?
    Investing

    What is Globalization?

  4. What are some examples of how cash flows ...
    Personal Finance

    What are some examples of how cash flows ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center