Studebaker V. Nettie's Flower Garden Inc

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From a business prospective it’s smart, because it relieves the employer from any legal actions, saving the business money and profits as well. One tends to overlook the considerable "personnel overhead" associated with the care and upkeep of a permanent employee. Corporate accountants typically figure on a labor load of 30% to 40%. But, the contract employee generally pays for these expenses out of pocket with "after-tax" income, so the equivalent labor load may approach 55% in replacement costs. If you are a permanent employee, use the preceding list to compute your real annual income. You may be surprised to learn how much you are actually making! Calculating one's total compensation can be very illuminating, indeed. For example, many permanent employees cite the high cost of health insurance as a major reason for staying where they are. Yet, the total replacement cost for company paid insurance for a typical single adult averages between $3500 and $4000 per year. (And, yes, there are a few excellent group plans out there for contract employees and independent contractors.) Compare this with the value of a company provided laptop computer, company car, performance bonuses, and company provided training and other perks. Upon further inspection, one quickly sees that retirement benefits are possibly the single greatest contributor to total compensation after the salary itself. A straight salary of $60,000 may ultimately translate into a total equivalent annual compensation approaching $95,000.

References

The Contract Employees Handbook (1997). Working the System to Your Advantage.

Retrieved from: http://www.cehandbook.com/cehandbook/htmlpages/ceh

_system.html

Twomey, D. P. (2013). Labor & Employment Law, Text and Cases (15th ed.). Mason,

OH: South-Western, Cengage Learning.

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