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Understanding Payroll/Remuneration

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Understanding Payroll/Remuneration

October 12, 2016

The accurate determination and reporting of payroll/remuneration under the correct classifications is essential to the development of accurate advisory pure premium rates and experience modifications. Further, for most workers' compensation policies the final premium is based on the payroll developed during the policy term. The USRP defines Payroll/Remuneration as follows:

Payroll – Remuneration

As used in this Plan, payroll and remuneration are synonymous and mean the monetary value at which service is recompensed. Except as provided herein, remuneration includes: gross wages, salaries, commissions, bonuses, vacation, holiday and sick pay, overtime payments, the market value of gifts, and all substitutes for money earned during the policy period by employees and officers of the employer, and any other persons for whom voluntary coverage is provided under the policy.

The definition establishes that payroll includes, with some exceptions, monetary payments and substitutes for money that employees receive as compensation in exchange for the work or services they provide.

The USRP contains numerous provisions that limit or adjust this defined payroll. For example, Classification 9181 includes a maximum payroll limitation.

ATHLETIC TEAMS OR PARKS – all players on salary list of employer, whether regularly played or not - including umpires

The entire remuneration of each player shall be included, subject to a maximum of $117,000 per season. When a player works for two or more teams in the same sport during the season, the maximum of $117,000 per person shall be prorated.

9181

With respect to Classification 9181, if a professional athlete received a multimillion dollar salary during the policy period, the amount to be reported as payroll would be limited to $109,200 and any amounts over this limit would be excluded for payroll reporting purposes. 

Additional rules that direct how payroll may be limited or adjusted, or whether specific payments are included as reportable payroll, are listed in the USRP at Part 3, Standard Classification System, Section V, Payroll – Remuneration. Section V includes examples that illustrate how the rules are to be applied.

As an additional resource, Appendix II of the USRP lists numerous types of compensation and indicates whether the compensation is included as reportable payroll. Each entry includes helpful information, such as an explanation or citation to the applicable rule. The entry for Accumulated Sick Pay is shown below.

Appendix II
Payroll/Remuneration Table

Type of Compensation

Accumulated Sick Pay

Is Payment Included as Payroll?

Yes

Exception or Comment

Payment of accumulated or accrued sick leave usually is made upon the employee's termination and is considered to be pay to which the employee would have been entitled had s/he remained employed. Include as payroll unless sick pay was accrued during periods that the employer was legally self-insured.

Related Information

California Workers' Compensation Uniform Statistical Reporting Plan - 1995

Online Guide to Workers' Compensation - The Standard Classification System

WCIRB Education on Demand

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