Workers Compensation Payroll and Remuneration

What constitutes payroll and other remuneration used to compute your Work Comp insurance premium.

What is payroll or remuneration and how does it effect workers compensation premium.

Simple dictionary definitions for payroll and remuneration;

Payroll:

1. A list of employees to be paid for services rendered; 2. Meaning to give money, amount to be paid

Remuneration:

1. To give or pay for some work or service done; 2. To make up for, to compensate

For the purpose of workers compensation, payroll means money or substitutes for money. Workers Compensation policies will always refer to the term remuneration. Payroll, the most common item included in remuneration, is however not the only item. We have provided below a list of items that NCCI includes as payroll. You'll see in our list there are many "non-money" items that are considered payroll. We've also provided a list of those items not included as payroll.

For most states NCCI or the National Council on Compensation Insurance outlines the rules and definitions of payroll as used for workers compensation premium computation. One of two basic premium exposures for a workers compensation policy is payroll (remuneration.) When your policy is first set up, the policy premium is based on an estimated exposure. After the policy expires, the actual payroll exposure for the policy period will be determined by the audit. The auditor will gather the actual payroll information and submit that information to your workers compensation insurance company where they will recalculate your workers compensation premium and send you a bill for the difference.

Payroll or Remuneration under NCCI rules includes;

Wages, Salaries and Hourly Pay, including retroactive wages or salaries
Commissions, including draws against commission
Bonuses, including stock bonus plans
Overtime Pay - see allowed overtime deductions for clearification
Vacation Time
Holliday Pay
Sick Pay
Profit Sharing Plans
Incentive Plans
Payment for Piecework
Davis-Bacon wages
Wages generated from prevailing wage laws
Payment to employees or allowances for hand or power tools supplied by the employee
Rental value of housing provided for employee use
Lodging provided by the employer
Value of meals provided by employer received by employees as part of their pay
Value of store certificates or merchandise and store credits given to employees
Payments by employer of contributions required by law to statutory insurance or pension plans
Annuity Plans
Expense reimbursements to employees when employers records do not confirm it as a valid business expense
Payments for salary reduction, employee savings plans, cafeteria plans and retirement plans when made through authorized salary reduction from the employees gross pay

These items are not treated as Payroll or Remuneration under NCCI rules;

Tips and other gratuities received by employees.
Payments by an employer to group insurance or group pension plans for employees - as allowed by NCCI rules
Payments by an employer into third party trusts for the Davis-Bacon Act or similar prevailing wage law qualified trust.
The value of special rewards for individual invention or discovery
Severance payments except for time worked.
Payments for active military duty
Employee discounts on items purchased from the employer
Supper meal payments for late work
Uniform allowances.
Certain employer provided perks such as:

Use of company vehicles
Airline flights or use of private plane
Incentive travel
Discounts for services
Club memberships
Tickets to entertainment events

Please keep in mind this general information is provided for your use and may or may not apply in your state of residence. Workers compensation laws, rules and governing bodies are state specific. Please contact our office for more specific workers compensation information for your state.

Some final thoughts

Payroll can be complicated. As you see there are many more components to payroll than you may have thought. Don't forget, payroll taken times your specific job class rates determines the base of your workers compensation premium computation.

Remember...if you need it, Workers Compensation Consultants is your first resource for help with workers compensation insurance issues from audit errors and workers compensation dispute resolution assistance to premium computation review.

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WORKERS COMPENSATION CONSULTANT
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Fax: (573) 447-4998
email: rks@workcompconsultant.com

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