Or. Admin. R. 150-317-1220 - Employee Compensation: Labor Cost Subtraction
Current through Register Vol. 61, No. 4, April 1, 2022
Example 1: A2zk Tech Inc. employs 50 workers who meet the requirements to be considered employees. Each employee receives a base annual salary of $375,000. In addition, the company pays commissions and bonuses based on performance. The company also provides its employees with fringe benefits, including health insurance and employer-provided retirement contributions, at a total cost of $15,000 per employee. Assume that A2zk also pays $25,000 in payroll taxes for each employee. Although A2zk Tech pays taxes for each employee, any tax amount paid for its employees is not used to calculate the total compensation. During 2020, 10 of the employees earned $150,000 each in commission and bonuses. Because the total compensation of each of those 10 employees exceeds $500,000, ($375,000 + $15,000 + $150,000 = $540,000), A2zk Tech calculates the total labor cost as [(40 * $390,000) (base salary plus benefits) + (10 * $500,000)] = $20,600,000.
Statutory/Other Authority: ORS 305.100 & 317A.100
Statutes/Other Implemented: ORS 316.167, 317A.100 & 670.600
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