Cost Accounting Standard
Authoritative Statutory Source
Fully Burdened Labor Rate
Total cost of employing a worker per hour including wages, payroll taxes, benefits, and overhead.
Detailed Definition & Statutory Context
Fully Burdened Labor Rate is governed by Cost Accounting Standard standards across corporate payroll administration, statutory tax withholding, and general ledger labor accounting. Rigorous compliance with Fully Burdened Labor Rate prevents IRS Form 941 deposit penalties and FLSA wage-and-hour litigation.
Statutory Formula & Equation
Burdened Hourly Rate = ( Total Annual Pay + Taxes + Benefits + Overhead ) ÷ Billable Hours Worked
General Ledger / Payroll Journal Entry Standard
Debit: Gross Payroll Expense / Employer Tax Expense
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Common Operational Pitfalls
- Excluding non-discretionary bonuses from FLSA overtime regular-rate calculations.
- Failing to cap Social Security tax withholding once employee earnings exceed the $168,600 wage base.
- Misclassifying non-exempt hourly employees as exempt salaried workers.