Insurance companies and their auditors are very specific with regards to the payrolls that can and can’t be included in a workers’ compensation policy as “remuneration”

The following list is taken from the Basic Manual 2001 Edition (latest manual at the time of this post) from www.ncci.com (National Council on Compensation Insurance, Inc.  If your state is not subject to NCCI, you may have some variations from this list.  Please check with your state authority for what the specifics are if you’re not operating in an NCCI jurisdiction.

 

Basic Manual 2001 Edition

Rule 2- Premium Basis and Payroll Allocation

B. Payroll

For the purposes of this payroll means money or substitutes for money.

1. Includes:

(Additional Rules: ME, MT, UT) (Exceptions: AK, AR, CO, IL, IN, KS, KY, MD, MS, MT, NM, NV, OK, OR, SD, TN, VA)

a. Wages or salary (including retroactive wages or salaries)

b. Total cash received by an employee for commissions and draws against commissions.

c. Bonuses including stock bonus plans.

d.Extra pay for overtime work except as provided in Rule 2-D-3

e. Pay for holidays, vacations, or periods of sickness.

f. Payment by an employer of amounts that would have been withheld from employees to meet statutory obligations for insurance or pension plans such as the Federal Social Security Act or Medicare.

g. Payment to employees on any basis other than time worked, such as piecework, profit sharing or incentive plans.

h. Payment or allowances for hand tools or hand-held power tools used by employees in their work or operations for the insured. These tools may be supplied directly by the employee or to the employee through a third party.

i.  The rental value of an apartment or house provided to an employee based on comparable accommodations.

j.  The value of lodging, other than an apartment or house received by an employee as part of their pay to the extent shown in the insured’s records.

k.  The value of meals received by employees as part of their pay to the extent shown in the insured’s records.

l.  The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay.

m.  Payments for salary reduction, employee savings plans, retirement or cafeteria plans (IRC 125) that are made through employee-authorized salary reduction from the employee’s gross pay.

n. Davis-Bacon wages or wages from a similar prevailing wage law.

o. Annuity plans.

p. Expense reimbursements to employees to the extent that an employer’s records do not confirm that the expense was incurred as a valid business expense.

q. Payments for filming or commercials excluding subsequent residuals that are earned by the commercial’s participants each time the commercial appears in print or is broadcast.

 

Check your state requirements to see the exemptions in your state.  As you can see, the list of included remuneration is comprehensive!