Caregiver Payroll Burden: What Each Hour Really Costs
Payroll taxes, unemployment insurance, workers' comp and paid leave add 13–22% to every caregiver hour. Line-by-line breakdown and why turnover makes it worse.
By Caregiver Scheduling Team ·
Payroll burden is what you pay on top of a caregiver’s wage: employer payroll taxes, unemployment insurance, workers’ compensation and required leave. For most home care agencies it adds 13% to 22% to every hour of pay before any optional benefits. On an $18/hour caregiver that’s $2.34 to $3.96 an hour you have to cover in your bill rate.
What goes into payroll burden?
| Cost | Rate | Notes |
|---|---|---|
| Social Security (employer share) | 6.2% | Up to the annual wage base |
| Medicare (employer share) | 1.45% | No cap |
| Federal unemployment (FUTA) | 0.6% effective | 6.0% on the first $7,000 per employee, less up to 5.4% credit for paying state unemployment (IRS Topic 759). Higher in “credit reduction” states |
| State unemployment (SUTA) | Varies widely | New employers get a state-assigned rate; it changes with your claims history |
| Workers’ compensation | Varies widely | Priced per $100 of payroll by class code and state. Home care is a higher-risk class because of lifting and driving |
| Paid sick leave | Varies | Required in many states and cities. Budget for the accrual rate your law sets |
| Typical total | 13%–22% | Before health insurance, retirement or other benefits |
Why does high turnover raise your burden?
FUTA and most state unemployment taxes apply only to the first part of each employee’s wages each year. For FUTA that’s the first $7,000. Every new hire starts that wage base over. An agency that replaces 70% of its caregivers each year pays FUTA and SUTA on far more wage-base dollars than an agency with stable staff. Higher turnover also means more paid orientation and training hours, which are burden-like costs that don’t produce billable hours. Estimate it with the retention calculator.
What does one caregiver cost for a year?
A caregiver earning $18/hour working 1,800 hours a year = $32,400 in wages.
| Item | Annual cost |
|---|---|
| Social Security + Medicare (7.65%) | $2,479 |
| FUTA (0.6% × $7,000) | $42 |
| SUTA (example: 2.7% on a $12,000 wage base) | $324 |
| Workers’ comp (example: $4.50 per $100 of payroll) | $1,458 |
| Paid sick leave (40 hours) | $720 + taxes ≈ $775 |
| Total burden | $5,078 (15.7%) |
The example rates are illustrations. Use your state’s SUTA notice and your workers’ comp policy for real figures.
How can you lower payroll burden without cutting pay?
- Reduce turnover. Fewer new hires means fewer restarted wage bases and less paid orientation.
- Manage workers’ comp claims. Lifting training and reporting injuries the same day lower your experience modifier over time.
- Check your class codes. Make sure office staff aren’t coded at the caregiver rate.
- Contest SUTA charges you don’t owe. Respond to state notices for caregivers who quit or were fired for cause.
How Caregiver Scheduling handles this
Every visit is GPS-verified, so you have a record of the hours caregivers actually spent with clients. Timesheets built from those visits, with weekly overtime, travel and training hours separated and approved pay periods exported to QuickBooks, are coming soon. $199/month for up to 10 caregivers or $299/month for up to 50, free for 30 days.
FAQ
What is a typical payroll burden for home care? Most agencies land between 13% and 22% of wages before optional benefits. Workers’ comp and state unemployment cause most of the difference.
Is mileage reimbursement part of payroll burden? No. Reimbursement at or below the IRS rate isn’t wages, but it’s still a cost per hour to include in your bill rate.
Does payroll burden apply to overtime? Yes. Taxes and workers’ comp apply to all wages, including overtime premiums.