Does Your Policy Payroll Match Your Budget Forecast?

Your policy payroll should match up with your budget forecast. Payroll and certain benefits – known as remuneration among the Workers Comp premium auditors – should match your budget for your next policy year. Just copying the payroll figures from your last years’ audit may result in giving your Workers Comp carrier having free use of your $$.

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This is a very prevalent situation as employers are shrinking their payrolls and laying off workers in a very down economy. If your company has shrunk or your payrolls have declined, do not just allow the carrier to copy last years’ audit as a baseline. For instance if your company has reduced its payroll by 18%, why would you have to pay the extra 18%?

This is a hotly debated item as often your agent may tell your company that it will be all refunded or credited back to your company at audit. Why would you wait 13 – 14 months to recover what you knew was going to occur at policy inception? The 13 – 14 month figure includes 12 months for the policy to expire and then 60 days for the audit and the results of the premium audit to concluded and reported by the carrier.

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This makes your projected budgets even more important when talking with your agent about your upfront policy premiums. If you do not have an exact budget prepared approximately 45 days before your fiscal end of year, your company will not have very much leverage or substantiating documentation.

You may wish to even throw in a graph of how your company is projecting your next fiscal years’ payroll numbers. As they say, a picture paints a thousand words – so do graphs.

Your agent and the carrier’s underwriter will require more than a verbal estimation. This is when Excel(R) can be very helpful along with your accounting package such as QuickBooks(R).

The same applies if your company decides to use temporary workers or subcontractors instead of regular employees. Using subcontractors invokes a new set of rules on whether or not they are actually employees.

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Term Of The Day – Remuneration

This is an archaic word at best. It is still used in Workers Comp vernacular as opposed to payroll, etc. Please note that this is a generic list and may not apply to all jurisdictions. Remuneration is not another Workers Comp term for payroll. After examining this list, one can see why the premium auditors want complete records.

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Remuneration consists of gross wages, or other compensation, before withholding taxes or other deductions including:

• Retroactive wages or salaries
• Total cash received by employees for commissions and draws against commissions
• Bonuses including stock bonus plans
• Extra pay for overtime work (with some exceptions)
• Pay for holidays, vacations or periods of sickness
• Payment by an employer of amounts otherwise required by law to be paid by employees to statutory insurance or pension plans, such as the Federal Social Security Act
• Payment to employees on any basis other than time worked, such as piecework, profit sharing or incentive plans
• Payment or allowance for hand tools or power tools used by hand provided by employers either directly or through a third party and used in their work or operations for the insured

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• The rental value of an apartment or a house provided for an employee based on comparable accommodations
• The value of lodging, other than an apartment or house, received by employees as part of their pay, to the extent shown in the insured’s records
• The value of meals received by employees as part of their pay to the extent shown in the insured’s records
• The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay
• Payments for salary reduction, employee savings plans, retirement or cafeteria plans that are made through employee authorized salary deductions from the employee’s gross pay
• Wages paid to employees as salary in conjunction with the Davis-Bacon Act or other prevailing wage laws
• Annuity plans
• Expense reimbursements to employees to the extent that an employer’s records do not substantiate that the expense was incurred as a valid business expense
• Payment for filming of commercials, excluding subsequent residuals that are earned by the commercial’s participant(s) each time the commercial appears in print or is broadcast.

Make Sure Your Policy Payroll Matches Your Budget Forecast

Does Your Policy Payroll Match Your Budget Forecast?

Is Remuneration Definition Same As Payroll?

Term Of The Day – Remuneration