How Much Does It Cost To Put An Employee On Payroll?
A business can calculate an employee’s total cost of employment by adding their base compensation and any additional expenses accrued by the business due to hiring and employing that person. There is no one-size-fits-all solution when it comes to calculating the total cost of putting an employee on payroll. Still, the formula most commonly used to measure employee costs is an average of 1.25 to 1.4 times the employee’s basic salary. A U.S. Bureau of Labor Statistics report shows that a civilian worker’s average cost is $38.91 an hour.
What Is The Average Monthly Cost Of Employee Benefits?
In most cases, the business’s scale and the benefits plan’s scope play the most prominent role in determining the overall cost of a company’s benefits program. Despite all that, businesses of all sizes find that offering more coverage and benefits can often be a valuable investment in the long run.
Total compensation consists of 69% wages and 31% benefits. Salary plus benefits are calculated based on a range of 1.25 to 1.4 times the employee’s base salary, which aligns with the basic salary plus benefits model. An employee earning $100,000 per year will cost their business between $125,000 and $140,000 per year once benefits are factored into the calculation. An employee earning $100,000 can cost a company between $125,000 and $140,000 per year.
Generally speaking, the health insurance policy that a company offers to its employees is the most considerable portion of its employees’ benefits as part of its employee benefit plan. Each year, employers pay $7,188 on average for single coverage and $20,576 for family coverage, according to the Kaiser Family Foundation. It is essential to understand that costs can be significantly different depending on your business. Still, it is usually between $5,000 and $30,000 per employee per year, depending on the amount of participation.
The purpose of disability insurance coverage is to provide employees with protection in the event of an illness or injury that renders them incapable of working. There are several options for employers regarding the cost of coverage. These include paying for it, sharing it with their employees, or offering group coverage to their employees.
The cost of disability insurance can be very high when purchased as an individual policy. Still, employers can reduce the cost by buying a group policy on an employee-by-employee basis. The cost of coverage can be several thousand dollars, depending on the range chosen. It is estimated that only a quarter of American workers have access to disability insurance through their employer. Making this available as part of your benefits package is one of the most effective ways to stand out from the competition.
Typically, workers’ compensation insurance covers the lost wages of workers injured on the job and medical expenses incurred by them as a result of their injuries. The calculation of the cost of workers’ compensation is based on a complicated formula.
However, businesses with relatively low risks, such as accounting firms, law firms, technology companies, etc., can expect to pay a low premium. In such cases, businesses should estimate this premium at around $300 per employee per month. However, this basic premium will go up with higher risk jobs. Construction, for example, is a high-risk field that could cost up to ten times this basic premium. Many states require employers to provide workers’ compensation to their employees as a condition of employment.
The importance of quality of life benefits in the job market continues to grow. As a result, many businesses are considering benefits such as paid time off, mental health coverage, child care, yoga lessons, gym memberships, and other wellness programs. These voluntary benefits are a way to attract and retain talent. As a result, estimating the costs associated with these programs is complicated. Depending on the size of the workforce, the company, and the type of benefit selected, these costs can vary widely.
However, the value these options can bring to employees usually makes the investment worth it. Employees identified regular remote work, employee discounts, flexible hours, and paid insurance premiums as some of the top benefits in a recent Staples Workplace Survey of more than 1500 employees.
The employees ranked employee discounts, free snacks and coffee, streaming subscriptions, gym memberships, onsite fitness programs etc. as benefits they would like to have but that are optional. To attract and retain high-quality and productive employees in the future, companies should seriously consider expanding their employee benefits programs.
Manage Your Benefits With Milestone
At Milestone, we own the payroll process, so you don’t have to. We will ensure your benefits align with your company’s goals and budget with customized pricing based on the level of service, the number of employees, and the pay cycle frequency. Contact us today to see how we could help your company.
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