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Throughout my piece of work of consulting with businesses in all aspects of workers bounty, I'm e'er asked a basic question nigh workers compensation payroll so I thought I'd elaborate for all. Nearly of us know that workers compensation premium is a office of rates defined by insurance carriers (and approved past various state insurance departments) and payroll by classification code. Because this is relatively directly forward, it's easy to gloss over "what is considered 'payroll' for workers compensation purposes?"

Wrong payroll has a direct impact on workers compensation premium, and information technology's critical that the right payroll be used. Nether-report payroll and you'll accept a big, nasty audit nib hit you lot 3 months after the policy expires (100% due in full, by the way); over-report payroll, and you drag down your cash flow throughout the year, and and so wait for your coin dorsum at the audit.

Beneath is a comprehensive list of the inclusions and exclusions for "payroll" as defined by the National Council on Compensation Insurance (NCCI):

Inclusions in payroll for Workers Bounty insurance:

• Wages or salaries, including retroactive wages. (Bank check with your insurance company auditor to have them provide state caps on individual weekly wage) Not capping individual wages is a common crusade for over-reporting
• Commissions and draws against commissions
• Bonuses including stock bonus plans
• Extra pay for overtime work, with exception
• Pay for holidays, vacations, or periods of sickness
• Payments by an employer of amounts required by constabulary to be paid by employees to statutory insurance or pension plans (similar Federal Social Security)
• Payments to employees on whatever basis other than time worked, such as piecework, profit sharing, or incentive plans
• Payments or allowance for manus tools or power tools used by hand and used in their piece of work or operations for the employer
• The rental value of an flat or business firm provided for an employee
• The value of lodging, other than apartment or house, received by employees as part of their pay
• The value of meals received by employees equally part of their pay
• The value of store certificates, merchandise, credits, or any other substitute for coin received by employees as part of their pay
• Payments for salary reduction, employee savings plan, retirement, or cafeteria plans that are made through employee-authorized salary reduction from the employee'southward gross pay
• Davis-Bacon wages or wages from a like prevailing wage law
• Annuity plans
• Expense reimbursements to employees to the extent that employers' records do not substantiate that the expense was incurred every bit a valid business expense (Note: when it can be verified that the employee was away from home overnight on the business organization of the employer, but the employer did non maintain verifiable receipts, a reasonable expense allowance, express to $xxx day, is permitted)
• Payment for filming of commercials, excluding subsequent residuals

Exclusions in payroll for Workers Compensation insurance:

• Tips and other gratuities received by employees
• Payments by an employer: (1) to group insurance or pension plans and (2) into tertiary-party pension trusts for the Davis-Bacon Player or similar wage constabulary (pension trust must exist qualified under IRC Sections 401(a) and 501(a)
• The value of special rewards for individual invention or discovery
• Dismissal or severance payments, except for time worked or accrued vacation
• Payments for agile military duty
• Employee discounts on goods purchased from employer
• Expense reimbursements to employees to extend an employer'due south records substantiate the expense was a valid business expense (Note: reimbursed expenses and flat expense allowances, except for hand or power tools, may be excluded from the audit if all 3 of the following conditions are met: (1) the reimbursed expenses were incurred upon the business of the employer,  (2) the amount of each employee'due south expense payments is shown separately in the record of the employer, and (3) the corporeality of each expense reimbursement approximates the actual expenses incurred by the employee)
• Dinner money for late work
• Work uniform allowances
• Sick pay to an employee by a third political party such as an insured's group insurance carrier that is paying disability income benefits
• Employer-provided perks such as: (ane) apply of an automobile, (ii) an aeroplane flight, (3) an incentive holiday (e.g. contest winner), (four) a discount on property or services, (5) order memberships, (half-dozen) tickets to entertainment events
• Employer contributions to bacon reduction, employee savings plans, retirements, or cafeteria plans (IRC 125) – contributions made by the employer that are determined by the amount contributed by the employee

I hope this helps y'all have a good understanding of what to include and what not to include in reporting payroll to the WC insurance company. Since payroll is used (directly and indirectly) every bit a factor in determining everything from premium, the Experience Modification Rate (EMR), deductible levels and aggregates, Min/Max on retrospective plans, and tracking ratios similar frequency rate, it'southward critical that payroll is understood and submitted correctly.

If you have whatever questions, please do not hesitate to reach out to your Gulfshore Insurance Client Advisor who tin can offer assist. Nosotros are here to help.

John Keller , CRM ARM CIC AAI is Client Advisor & Risk Managing director at Gulfshore Insurance specializing in non-profit and religious organizations. John works with a wide range of concern clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at jkeller@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in business concern insurance including liability insurance, property insurance, workers bounty insurance, vehicle insurance, business organization income suspension insurance, cyber insurance, commercial umbrella insurance, and more. Our insurance and take a chance management advisors are manufacture specialists for condominium associations, golf game and country clubs, oil and petroleum marketers, structure, landscaping, churches and not-profits, and work comp. Navigating insurance requires an experienced and trusted insurance agent who understands your business organisation risks and exposures. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, Sarasota, Lido Beach, Longboat Central, Bradenton Beach, and Southwest Florida. We take office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

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Source: https://www.gulfshoreinsurance.com/whats-considered-payroll-workers-compensation-purposes/