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Workers' Compensation Insurance Coverage
Your gross payrolls are reviewed to determine your premiums for
Workers ' Compensation insurance coverage. Gross payroll includes
total remuneration for services performed, including:
- Wages
- Overtime (straight time portion)
- Bonuses
- Commissions (including 1099 commissions)
- Holiday and Vacation Pay
- Sick Pay (except 3rd party reimbursements)
- Incentive Plans
- Piece Work
- Auto Allowances (except expense reimbursements)
- Housing Allowances (for certain class codes)
- Savings Plan (401 K) Employee Contributions
OVERTIME EARNINGS RECORDS
Earnings records for each individual should be organized to include
overtime payments, the employee's job classification and total remuneration.
State law allows the premium portion of overtime payment to be excluded
from total payroll for determining premiums.
CORPORATE EXECUTIVE OFFICERS, PARTNERS, SOLE PROPERTIES
When included in your policy, the earnings of executive officers,
partners, and sole proprietors must be assigned to the specific
classifications for the work they perform. State law specifies an
earnings minimum and maximum for these salaries when determining
premiums.
RECORDS REQUIRED FOR PREMIUM AUDITING
The insurance company representative will look at the following
records during the Premium Audit process:
PAYROLL
Monthly and Quarterly totals
Work classification totals
Separate totals for clerical office, outside sales and any type
of work performed Overtime by work classification classes
INDIVIDUAL EARNINGS
Type of Work performed
Date of hire and/or termination
Gross pay totals, monthly and quarterly
Overtime totals, monthly and quarterly
CASH DISBURSEMENT AND JOB COST JOURNALS
Monthly totals by account, including:
- Subcontractors
- Casual Labor
- Contract Labor
VERIFICATION AND BALANCING
Employers Federal Tax Return Form 941 (Quarterly)
State Unemployment Tax Return (Quarterly)
General Ledger
W-2 Statements
1099 Statements
Financial Statements
CONTRACTORS LICENSE AND CERTIFICATES OF INSURANCE
License from each subcontractor
Certificate from each subcontractors
SPECIAL NOTE REGARDING SUBCONTRACTORS
If your company hires subcontracting companies which have not purchased
Worker's Compensation insurance for their employees, insurance laws
require that your policy must provide coverage for theses employees
should they suffer any work-related injury or illness while on your
premises or job site. Even more important is the issue of a contractor
's license. State law demands that unlicensed subcontractors must
be considered employees of the hiring contractor.
An agreement or written contract with the subcontractor releasing
you from such Worker's Compensation coverage would not be sufficient
under the law. Even if the subcontractor may have accident and health
insurance policies, you would still be liable for Worker's Compensation
coverage for the subcontractor 's employees while on your job. The
answer is to obtain a copy of the subcontractor 's license and a
certificate of Worker's Compensation insurance from the subcontractors
before any work begins. The insurance company representative will
require this proof of insurance and insurance during the audit process.
Otherwise, you must include the subcontractor's payroll along with
your payroll to determine your actual premium costs, which could
be substantially higher. (SEE ATTACHED "INDEPENDENT CONTRACTOR"
DEFINITION)
WAIVER OF SUBROGATION
When your policy includes a waiver endorsement it is necessary for
you to maintain payroll records which accurately segregate, by classification,
the remuneration of your employees while engaged in the work, described
in the schedule.
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