Payroll burden (labor burden) includes which costs?

• A. Salary only.
• B. Salary plus employer-provided benefits and payroll taxes.
• C. Health Insurance, paid time off, payroll taxes, pensions, and matching contributions to a 401k.
• D. Client travel expenses.

Answer: (C)

Labor burden represents the costs an employer incurs to employ someone beyond the base salary. It includes the employer’s share of benefits and taxes as well as other commitments tied to keeping an employee on the payroll. Health insurance premiums funded by the employer, paid time off (vacations, sick leave, holidays), payroll taxes (employer portions of Social Security/Medicare and unemployment taxes), pensions, and 401(k) matching are all typical parts of this burden. These items add up per employee and are usually allocated to projects or clients to reflect the true cost of labor. Client travel expenses, by contrast, are separate direct project costs and not part of the payroll burden.