The “cost to you” is more than just the hourly wage when you pay your employee. It is the amount that will come out of your allocation and includes employer taxes and worker's compensation insurance costs that Morning Sun will pay on your behalf. The amount of those taxes and worker's compensation insurance is shown below:
| Total Employer Contributions |
| FICA (Social Security) |
6.20% |
| Medicare |
1.45% |
| FUTA (Federal) |
0.60% |
| SUTA (State) |
2.50% |
| Worker's Compensation |
2.75% |
| TOTAL COST |
13.50% |
What this means is that for every $1.00 you pay in wages, you must add approximately 14 cents to pay for taxes and Worker’s’ Compensation. The “Cost to You” is simply the employee’s wage multiplied by 1.1350 (the 14 cents per dollar mentioned above). It is important for you to understand how this impacts your authorized allocation/budget.
NOTE: The employee(s) wage (before any “Cost to You”) MUST be at least the current minimum wage.
Simply fill in the blanks below to determine the "Cost to You."
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X |
1.1358 |
= |
|
| Employee Wage |
|
Taxes & Worker's Comp |
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Cost to You (always round up to the next penny)
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Example 1:
Jill wants to pay her new employee, Jack, the wage rate of $7.25 per hour. Using the tool described above, Jill calculates her costs:
$7.25 X 1.1358 = $8.24 ($8.23455)
It will cost Jane $8.24 per hour to pay her employee a wage of $7.25 per hour. Jill determines how this will impact her budget. She then fills out the “New Employee/Employee Change Notification” with a wage of $7.25 per hour for Jack and returns it to Morning Sun before Jack’s first day of employment.
Example 2:
Bill wants to give his employee, May, a wage increase. He spoke with his support coordinator and knows that $9.80 per hour is an allowable rate for his approved service code. Bill calculates what it would cost him to pay May a wage of $9.80 per hour using the tool described above:
$9.80 X 1.1358 = $11.14 (11.1308)
It would cost Bill $11.14 per hour to pay his employee, May, a wage of $9.80 per hour. Bill determines how this will impact his budget. He decides he can afford to increase May's wage to $9.80 per hour. Bill completes an “New Employee/Employee Change Notification” for May with the new rate of $9.80 per hour. Bill sends the Employee Wage Notice so that Morning Sun receives it one week prior to thepay period end date for which the new wages are to take effect.