# The REAL Cost of an Employee Smoke Break

While I knew hiring an employee who smoked had its costs, I never realized just how much an employee smoke break was costing me until I sat down and added it up one day. I nearly fell off my chair. A total annual cost with just four -10 minute smoke breaks a day was costing me nearly \$7,300 USD a year! Here is how I calculated it and you can do the same.

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#### Get the Total Time of Smoke Breaks in a Year

With four, 10-minute smoke breaks a day, this is 40 minutes in total per day and 200 minutes for a 5 day work week. With a 52 Week year this equals 10,400 Minutes per year (or roughly 173 total hours of paid, but non-working, smoke breaks in a year)

#### Determine Actual Annual Work Hours

Since I knew I had 173 hours of smoke breaks in a year, I then wanted to get my Actual Hourly Cost of that Employee. To calculate this cost I used what is called a Labor Burden Calculation. To obtain this, I first had to determine my Employees total Actual Working Hours in a year. At 40 Hours a Week, and 52 Weeks a year the total Paid Hours was 2080. However, I was interested in the Actual Working Hours so I also deducted 40 Hours of paid vacation leave, 50 hours of paid sick leave, 40 hours of paid holidays, and 15 hours of training, to get a total 145 hours of paid leave hours. I then added the additional 173 hours of smoke breaks, resulting in  1762 Actual Working Hours in a year (2080 – 318).

#### Calculate Actual Employee Annual Costs

To Determine the Annual costs I wanted to annualize the salary along with all of the other direct employee related costs. I started with the \$25.00 per hour cost the employee was paid and at 40 hours a week and 52 weeks a year, I calculated a gross salary of \$52,000 per year.

Next I determined my additional costs from the Employer Paid Taxes in which I was responsible for. Which were FICA – 6.2%, Medicare – 1.45%, FUTA  – 6%, State Unempl. – 6%, and CA SDI -0.9%. Along with their individual base limits, this totaled \$5,286 annually.

Other annual costs, including  Workers Compensation 10.5%, Company Paid 401k Contribution – 2%, and Liability Insurance at 1.0% totalled \$7,020

Lastly, I had to total all of my company paid employee benefits which were Health Insurance \$1,800, Fuel Reimbursement \$1,800 and a Christmas Bonus \$1,000 totalling \$4,600 annually.

Combining the Salary, Taxes, Other Costs, and Benefits, my Total Annual Cost for this Employee was \$68,906.

#### Find Actual Hourly Cost

Now that we have both the Actual Hours Worked and Total Annual Costs, its just a simple division calculation (\$68,906 Annual Cost / 1,762 Annual Actual Work Hours) = \$39.11 Actual Hourly Cost

One last important expense that I also had to add in was my overhead into this Actual Hourly Cost, its a bit more complicated but basically I had \$27,000 in Annual Overhead (Office Lease, Utilities, etc) , which was spread across 4 Employees based on their Actual Hours Worked which calculated out to an additional \$3.05  per hour

After adding in this additional \$3.05, my Actual Hourly Cost for this employee calculated ou to \$42.16. Now, I had previously calculated the total smoke breaks to 173 hours in a year. With a simple multiplication (\$42.16 Hourly Cost * 173 Smoke Break Hours), I can see that the Total Annual Cost of these smoke breaks is costing me \$7293.68. Ouch!