Burden Rate

A burden rate is a factor or multiplier applied to direct labor costs that accounts for indirect costs (overhead, fringe benefits, G&A expenses) and often profit margin. The burden rate converts direct labor costs into fully burdened labor rates used in contract pricing. For example, if an employee's direct labor rate is $50/hour and the burden rate is 1.8, the fully burdened rate is $90/hour. Burden rates vary by contract type, company cost structure, and regulatory requirements. Government contractors must ensure burden rates are based on actual costs, comply with Cost Accounting Standards where applicable, and are reasonable compared to industry benchmarks. DCAA audits burden rate calculations for government contracts.