Jon Nelson Insurance

Contractor Law & Regulation

When determining the basis of premium, the following are included as payroll:

  • Gross wages
  • Salaries
  • Commissions
  • All bonuses
  • Most profit sharing
  • Vacation, holiday and sick pay
  • Overtime (“straight time” portion only)
  • The market value of gifts
  • Automobile allowances (less reimbursement for documented expenses)

The following items are excluded from payroll when determining the basis of premium:

  • Meals or lodging (unless the classification phraseology specifically includes them or they are provided in lieu of wages)
  • Tips
  • Premium portion of overtime pay (the increase above the regular rate of pay)
  • Severance pay (except for accrued vacation, sick pay, commissions and bonuses)
  • Employer contributions to qualified insurance, stock or retirement plans
  • Stock options
  • The value of an automobile furnished to an employee

In addition, the following are not included as payroll for premium computation:

  • Employee discounts for merchandise
  • Residual payments for commercials
  • A uniform allowance

Note:
Payroll for workers’ compensation insurance purposes is not necessarily the same as the Internal Revenue Service definition of payroll.

This information sourced from wcirb.com

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