How to budget fringes & payroll fees and avoid unexpected surprises

What is a fringe?

A fringe can be different things. For example, it can be a State Tax that employers must pay on employee salaries, it can be contributions to union benefits such as Pension & Health, or it can be something like fees paid for checks cut to Above-The-Line employees. Fringes aren’t an actual line-item in your budget, but rather they are applied to line items in the budget.

A fringe can be either a percentage (for example a 1.5% fringe on a $100 line item would be $1.50 in “fringes”) or a flat rate per unit (for example payroll companies will often charge a fee for above-the-line employees in the form of $10/check – and since checks are cut every week, that essentially means $10/week.)

Another thing to know about fringes is that it may have a ceiling, which means once you’ve paid the amount of that ceiling, you no longer have to pay the fringe. All you need to do is enter that ceiling amount into your budget, and your budget will do the calculation for you.

Fringes are actually quite easy to ingest into a budget if you know what to look for. And after you’ve set it up once, it just becomes a matter of updating the fringe numbers as needed. So the first question becomes where to actually find the fringes applicable to your production that you need to budget for, and that information is more accessible to you than you might think.

Pick up the phone and ask!

Getting the information you need requires no more than a single phone call, and a friendly sales person at an entertainment payroll company will happily breakdown all the fringes you need to account for. The secret words are “I’m budgeting a feature and would love to use you guys as my payroll company. I’m new to the process. I was wondering if you could tell me what fringes I should budget for?” This is exactly what I did when I was budgeting my first feature.

Call a payroll company you’re legitimately interested in working with, and if they’re genuinely helpful, then show your appreciation by hiring them when you’re ready to go into production. Depending on what state you’re shooting in and which unions you’re a signatory to, they’ll give you the applicable fringes you need to apply into your budget. Then it’s just a matter of applying them to the applicable line items. So: what fringes should you look out for?

Payroll Fringes

Payroll fringes are: employer state taxes, federal taxes, social security, medicare, but also workers compensation insurance (which is a legal requirement) and of course finally a payroll processing fee (because the payroll company needs to be compensated somehow, and usually it’s in the form of a fringe. In some cases when the budget is so low, they might instead just charge you a flat rate, but in most cases it will be a fringe applied to your production’s gross wages.)

To illustrate, here are the payroll fringe rates from my last feature shot in Los Angeles:

• Federal Unemployment Insurance: 0.60% with a ceiling of $7,000
• Federal Unemployment Insurance Solvency: 1.80% with a ceiling of $7,000
• State Unemployment Insurance California: 6.20% with a ceiling of $7,000
• FICA Old Age Survivor & Disability: 6.20% with a ceiling of $118,500
• Medicare: 1.45% with no ceiling
• Payroll Processing Fee for Below the Line: 1.00% of gross payroll
• Payroll Processing Fee for Above the Line: $10/check (since checks are weekly: $10/week)
• Worker’s Compensation on set: $4.03 per $100 (or 4.03%)

Often times, a payroll company will have all of this listed on a rate sheet, which they will happily share with you if you’re interested in working with them.

Union Fringes

Besides payroll fringes, you’ll also have Union fringes, depending on what unions you’re a signatory to.

For example, SAG-AFTRA will have a Pension & Health Fund which you’ll need to contribute to. The rate will depend on whether they’re a Cast or Background Performer and will depend on the latest contract. But essentially you’ll have to pay an additional percentage on top of the gross wages to your cast. This pay will go to their Pension & Health Fund. Currently the P&H fringes are 17.3% for Principal Performers, and 17% for Background Performers.

IATSE will have you pay a flat fringe for every hour worked for every IATSE employee, as well as a percentage of the gross wages earned by these employees. So you have to make sure to get the numbers for all fringes that apply and be sure to apply both the flat fringes as well as the % fringes to your budget.

DGA & WGA will have a Pension & Health Fund similar to SAG-AFTRA. Teamsters will have a flat fringe per hour similar to that of IATSE. 

Since these fringes are often changing, the first thing you need to do on any production is do the research and get the latest fringes for each applicable union. There are a few ways to get these numbers: you can always start by asking the payroll company, second you can go to the applicable union’s website and download the applicable agreement. It should state the fringe.

Lastly, I’ll always confirm the fringes with a Union Rep directly, just to be sure I’m budgeting correctly (since contracts are constantly being renewed, and websites may be out of date.) Usually they’ll be very helpful. Sometimes, they might seem annoyed you’re calling, but pay no attention to that. At the end of the day it’s your responsibility to do your due diligence and cover your ass!

It always feels a bit more overwhelming the first time you go through this, but the more you do this, the more familiar you’ll become with fringes, and the easier it gets!