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Payroll/Remuneration: Market Value of Lodging Defined

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Payroll/Remuneration: Market Value of Lodging Defined

March 8, 2017

It is common in some industries for an employer to provide lodging to employees. Part 3, Standard Classification System, Section V, Payroll – Remuneration, Rule 1b of the California Workers' Compensation Uniform Statistical Reporting Plan–1995 (USRP) provides that the value of meals or lodging can only be included as reported payroll in the specified circumstances

b. Meals and Lodging

The value of meals or lodging provided to an employee shall not be included in the payroll unless:

(1) the special industry classification procedures or the classification phraseology specifically prescribe otherwise, 
(2) the employee’s wages are reduced by an amount equal to the value of such meals or lodging, or 
(3) the meals or lodging are provided expressly in lieu of wages. 

When the value of lodging is included in payroll, the total market value of the lodging is included. The market value of lodging is the amount of money the employer could reasonably expect to receive if the lodging were made available to the general public or the amount of money the residing employee would expect to pay for comparable housing in the same area. The market value can only be reduced by any rent that the employee pays, such as in situations where the employee receives a partial rent credit. Effective January 1, 2017, Section V, Payroll – Remuneration, Rule 1b of the USRP was amended to define the term "market value" as follows:

"Market value" is the cost to rent similar lodging in the open market minus any rent paid by the employee. The market value shall not be reduced based on partial business use of the housing unit, the tax value of lodging, the rent control value or similar reasons. For hotel and motel lodging, market value is the cost to rent a comparable apartment unit in the local open market, not the nightly room rate paid by hotel or motel customers.

With regard to lodging, the special industry classification procedures for Farms and Mining direct that the market value of lodging provided to the employee shall be included as payroll. In addition, the following classifications direct that the value of lodging be included:
  

  • 8840, Churches, Temples, Mosques And Synagogues – clergy, professional assistants, organists, or members of choir – including Clerical Office Employees
  • 9015(4), Churches, Temples, Mosques And Synagogues – all employees other than clergy, professional assistants, organists, members of choir or Clerical Office Employees
  • 9050(1), Hotels
  • 9050(2), Motels
  • 9033, Housing Authorities
  • 9011(1), Apartment Or Condominium Complex Operation – N.O.C. – not Homeowners Associations – all other employees
  • 9007, Apartment Or Condominium Complex Operation For Seniors – age restricted – not Congregate Living Facilities or Homeowners Associations – all other employees
  • 9015(1), Building Operation – N.O.C. – all other employees
  • 9011(2), Commercial And Residential Mixed-Use Building Operation – not Homeowners Associations – all other employees
  • 9010, Mobile Home Park Operation – all other employees
  • 8290, Warehouses – self-storage – all other employees

To learn more about the classifications listed above, use the Classification Search tool on WCIRB.com. To learn more about special industry classification procedures, consult Part 3, Section IV, Special Industry Classification Procedures of the USRP.

Related Resources

Understanding Payroll/Remuneration
Classification Information
Online Guide to Workers’ Compensation: The Standard Classification System

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