What is the Correlation of Workers’ Compensation and Payroll?
Posted by Klinger Insurance Group on
Workers’ compensation insurance protects employers from claims resulting from injuries to employees. It protects your business from lawsuits and provides employees with compensation for on-the-job injuries.
By law, most employers are required to provide coverage for lost wages and medical bills incurred as a result of on-the-job accidents or illnesses. For many businesses, workers comp coverage is the largest part of its expense.
These are a few factors in determining the workers’ compensation premiums: your company payroll, the type of work employees do, the state in which your business is located, and your workers’ compensation claims history.
To estimate the workers’ compensation cost, your insurance provider normally uses this formula: Total Annual Employee Payroll/ 100 X Workers Compensation Rate= Estimated Compensation Insurance Cost.
What Payrolls are subject to workers’ compensation?
Inclusions in payroll for Workers Compensation Insurance
Payroll – Wages or salaries including retroactive wages or salaries
Pay for holidays, vacations, or periods of sickness
Employer payment into statutory insurance and pensions plans
Payment for piecework, profit-sharing, or other incentive plans
Payment, compensation, or allowance for tools used in work
The rental value of apartment or accommodation provided for an employee
Value of other lodgings as part of pay
Value of meals received by employees as part of their pay
Value of store certificates, credits, merchandise, or other money substitutes received
Payments for salary reduction, employee savings plans, retirement, or cafeteria plan
Davis-Bacon pay or pay from other prevailing wage law
Expense reimbursement to employees where employer records do not indicate a valid business expense,
Payment for filming commercials excluding residuals
Exclusions in payroll for Workers Compensation Insurance
Tips and other gratuities
Employer payments to group insurance or group pension plans
Employer payments into third party trusts for the David-Bacon Act or similar prevailing wage law qualified trust
Value of special rewards for individual invention or discovery
Dismissal or 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
Perks such as airplane flights, club memberships, incentive vacations and etc
It is noteworthy to mention that workers’ compensation laws vary by state, somake sure you check your state workers’ compensation laws for any exceptions to these rules. Additionally, make sure to report your payroll accurately, and to review your company description with your insurer.
At Klinger Insurance Group, we are equipped with years of experience in handling various businesses, we can ensure that your business meets your state’s regulations and provide for your workers’ needs. We also ensure that our clients receive the most cost-effective, comprehensive coverage at the best possible rates. Talk to our insurance advisor today at 301-428-4935 or e-mail us at firstname.lastname@example.org or visit our website at www.klingerinsurancegroup.com/. Click here to get a free quote e for your workers’ needs.