Burden Rate
A burden rate is what a staffing agency pays on top of wages: payroll taxes, unemployment, workers' comp and benefits. How to calculate it, with an estimator.September 24, 2026
5 min read
Payroll
Written by the NextCrew team
Definition
A burden rate is the cost an employer pays on top of a Crew Member's wages, shown as a percentage of pay: payroll taxes, unemployment taxes, workers' compensation and any benefits. A Crew Member paid $20.00 an hour at a 15% burden costs the agency $23.00 an hour before it bills anything.
What adds up to a burden rate
Burden rate estimator
Enter a pay rate and your own tax and insurance rates to see the burden per hour. The starting values are illustrative; replace the state unemployment and workers' comp rates with the ones on your notices and policy.
Your rates
Per hour
Burden rate
14.25% of pay
Any markup at or below this loses money on every hour
Burden per hour
$2.85
Loaded cost per hour
$22.85
FICAFUTASUTAWorkers' compBenefits
Estimates only. Unemployment taxes are applied to every hour, which is what they cost until a Crew Member's wages pass the yearly wage base. Not tax or accounting advice.
What is included in a staffing agency's burden rate?
Five costs make up most burden rates, and only the first is the same for every agency.
| Cost | Set by | How it is charged |
|---|---|---|
| Social Security and Medicare (FICA) | Federal law | 7.65% of wages: 6.2% Social Security up to the wage base ($184,500 in 2026) plus 1.45% Medicare |
| Federal unemployment (FUTA) | Federal law | 6.0% on the first $7,000 of each employee's wages, usually 0.6% after the credit for state unemployment tax |
| State unemployment (SUTA) | Each state | A rate set for your agency from its claims history, on a wage base that differs by state |
| Workers' compensation | Your carrier or state fund | A rate per $100 of payroll for each class code, adjusted by your experience modifier |
| Benefits | You, and some state and local laws | Health coverage, paid sick leave and anything else you provide |
Sources: IRS (FUTA rate and credit), PayrollOrg reporting the Social Security Administration's 2026 wage base. Employers in FUTA credit reduction states pay more than 0.6%.
How do you calculate a burden rate?
Burden rate = employer costs on wages ÷ wages. Work it out per role and per state, because the workers' comp and state unemployment rates change with both. Here is the default example from the estimator:
| On a $20.00 pay rate | Rate | Per hour |
|---|---|---|
| FICA | 7.65% | $1.53 |
| Federal unemployment | 0.6% | $0.12 |
| State unemployment (assumed) | 3.0% | $0.60 |
| Workers' comp (assumed $3.00 per $100) | 3.0% | $0.60 |
| Benefits | 0% | $0.00 |
| Burden | 14.25% | $2.85 |
Illustrative rates for the state unemployment and workers' comp lines.
At a 14.25% burden, any markup of 14.25% or less loses money on every hour. The markup has to clear the burden before it produces any margin.
Why does the burden rate change during the year?
Unemployment taxes stop once a Crew Member's wages pass the yearly wage base, so burden is highest early in the year and for every new Crew Member. The wage base resets each January and applies per employee, so an agency with high turnover keeps paying unemployment tax on the first dollars of every new Crew Member's wages. A burden rate averaged over a full year understates the cost of a short assignment that starts in January.
Where agencies get burden rates wrong
A burden rate is only as good as the rates you put into it.
- One burden rate for every role. Workers' comp depends on the class code, so a warehouse role and an office role carry very different burdens.
- Last year's state unemployment rate. States send a new rate notice, often every year. If the burden in your pricing is not updated, every new quote is priced on an old cost.
- Leaving out benefits and required paid leave. Health coverage and paid sick leave in states and cities that require it are part of the cost of an hour, even if they are paid out later.
- Forgetting overtime. Payroll taxes apply to overtime wages too, so a time-and-a-half hour carries more burden in dollars than a regular one.
Bottom line: calculate burden per role and per state, update it when your tax and insurance rates change, and make sure every markup clears it.
How NextCrew handles burden
NextCrew does not calculate payroll taxes or insurance premiums; your payroll provider and carrier do. It keeps the rates that have to cover them consistent from order to invoice.
- Pay rate, markup and bill rate set together per position in a client's rate configuration, and applied automatically to that client's future job orders.
- Overtime calculated from your jurisdiction and overtime settings, with overtime and holiday pay codes carrying their own bill rates, so premium hours bill at premium rates.
- Approved hours exported to your payroll provider, including Paychex and Everee, so taxes are calculated on the same hours you invoiced.
See how it fits together in payroll software for staffing agencies.
Frequently asked questions
Related terms
- Workers' comp class codes: set the workers' comp part of the burden for each role.
- Markup: has to clear the burden rate before it produces any margin.
- Bill rate: covers pay, burden and margin.
- Gross margin: what is left of the bill rate after pay and burden.
- Payrolling: employing a client-chosen worker, where you carry the full burden.
- Shift differential: premium pay that carries burden like any other pay.
- SUTA tax: the state unemployment tax inside the burden.
- Staffing agency insurance: the policies behind the insurance part of the burden.
Tax figures are for 2026 and change each year. This page is not tax or legal advice.