In
all states but one, Workers' Compensation insurance uses
"remuneration" as the
exclusive basis for computing premiums. (Washington
State currently allows contractors to use hours worked
instead.) But although
payroll is the most common
component of remuneration, it is
not the only one. In
most states, the rules about remuneration are written by
the National Council on Compensation Insurance, or
NCCI. But
keep in mind that some states are non-NCCI
jurisdictions, where there may be some significant
differences in how remuneration is defined. The primary
differences is that a few non-NCCI states (Delaware and
Pennsylvania) do not allow for the premium portion of
overtime pay to be excluded. Most other states, even
non-NCCI ones, follow NCCI rules in this regard pretty
closely. Please keep in mind that this information is
offered only as a general guide. We recommend that
employers check with their local state
regulators
to verify what specific rules and exceptions to these
general guidelines may apply. Under NCCI rules,
remuneration
includes:
Regular
pay, including salary or hourly;
Commissions;
Bonuses
Overtime pay, less
the premium portion;
Holiday, vacation,
and sick pay;
Payments by
employer of contributions required by law to
statutory insurance or pension plans such as Social
Security which would otherwise be paid by employee;
Piecework,
incentive plans, profit-sharing plans;
Payments to
employees for hand or power tools supplied by
employees;
Rental value of
housing provided to employee;
Value of lodging
provided by employer;
Value of meals
provided by employer;
Value of store
certificates, merchandise, or credits given to
employees by employer
Tips
and gratuities received by employee;
Payments by employer
to group insurance plans;
Value of special
awards paid for invention or discovery;
Dismissal or severance
pay except for time worked or accrued vacation;
Value of
employer-provided aircraft;
Value of
employer-provided automobile;
Value of
employer-provided free or discounted aircraft flight;
Value of
employer-provided incentive vacation (contest winner);
Employer-provided
discount on property or services;
Employer-provided
ticket to an entertainment event;
Employer payments to
military reservists called to active duty-these payments
make up the difference between military pay and
employee's pay prior to conscription.
OVERTIME:
The only pay
differential that can be adjusted back to straight
time, under NCCI rules, is overtime (either time and
a half or double time). Other pay differentials,
such as paying nine hours pay for eight hours work,
can not be adjusted under NCCI manual rules. Also,
keep in mind that although most states follow this
NCCI rule regarding overtime, there are some
exceptions. Pennsylvania and Delaware, for example,
do not allow the premium portion of overtime to be
removed from the payroll calculation. So always
check and make sure about the rules in your
particular state or state.
Prevailing Wages (Davis-Bacon
Act)
Contractors that pay prevailing
wages to workers can deduct from the Workers'
Compensation payroll used to compute premiums
payments made to qualified health and pension
benefit programs for workers subject to prevailing
wage contracts.
Remember, Workers
Compensation policies start with an estimated premium,
but after the policy expires the insurance company will
want to determine actual audited premium, by determining
actual remuneration (or payroll) for the policy period.
A good way to avoid mistakes in the audit process is to
request a copy of the auditor's workpapers. This can
serve as a roadmap, showing how the auditor determined
remuneration and how it was placed into particular
classifications. |
