What is the rule of thumb or formula to predict the true cost of each employee in California? The true cost including all benefits, mandated and normally given.

A common rule of thumb for full time employees with full benefits is 50–60% over their raw billing rate.

3 weeks of vacation + 3 weeks of sick time + 2 weeks of holidays out of 52 weeks is 15%

FICA and other employment taxes is about 8%

Your employee needs institutional services (payroll, accounting, etc. - often referred to as General and Administrative) - typically around 20%

Your employee will require a manager (unless you've accounted for that explicitly elsewhere) - Somewhere between 10–20% works out - A manager may manage 10 people, but their pay is higher.

So now you're up to around 50%

Then there's some "salary independent" kinds of costs:

Health insurance - This is a big chunk. It varies from around $300/mo to $2000/m depending on how good you are at negotiating, how big you are as an employer, the average age of your employees, etc. It also depends on what share you're paying, as the employer.

A computer on their desk, network hookup, phone, etc. is about $300/mo - $3600/yr

Rent in California is about $3–4/square foot/month with all utilities included - a minimal workspace is 55 square feet, 100 square feet is big, so $150–300/mo for office space

Stacking all these up, let's say $10k for insurance, $4k for office equipment, network, computer, and $2k for rent/utilities. - that's $16k/yr

If your employee is a 50k/yr person, then the 16k is a bigger percentage than if they're a 100k/yr.

You can slice and dice this in a lot of ways - Maybe you're looking for "raw employee+benefits" cost and you'll take care of management, rent, facilities elsewhere.

A fully-loaded benefits+administration cost for employees might be as high as 50%. Or as low as 20%.


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