Your Payroll. At Work for You. What s Reportable? What s Not? copperpoint.com

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1 Your Payroll What s Reportable? What s Not? copperpoint.com At Work for You

2 Determining Your Premium Premiums are based on the amount of money or money substitutes you pay or are payable to your workers who are covered by your workers compensation policy. The one exception is if you employ domestic workers people who perform household duties. In those cases, premium is based on the number of workers rather than payroll. Here is a list of what needs to be reported for determination of premium. Annuity plan Bonuses Holiday, vacation or sick leave pay Retirement plans (employee costs) Retroactive wages Shift pay differential Payment for filming of commercials Overtime work at the normal straight time rate of pay Cash paid for commissions and draws against commissions Cafeteria plan IRC 125: Employee cost, i.e. salary deductions for benefits Car allowance (reportable when verifiable records to substantiate reimbursements are not available) Corporate officer minimum/maximum salary per requirements established by the rating organization (subject to change annually) Davis-Bacon wages: Total prevailing wages paid to employee Employee contributions to group insurance and/or to savings plans Amounts you would have withheld from employees to meet statutory obligations for insurance or pension plans, such as the Federal Social Security Act or Medicare Payment to employees on any basis other than time worked, such as piece work, profit sharing or incentive plans Payment or allowance you pay for hand tools or hand-powered tools your employees provide and use in their work for you Value of rental housing provided to an employee based on comparable accommodations (this applies to independent living only) 2 Your Payroll

3 Value of store certificates, merchandise, credits or any other substitute for money employees receive as pay Travel expenses (reimbursement without verifiable records) Wages paid to employees, including family members and minors You don t need to report: Active military pay Bunkhouse allowance Extra pay portion of overtime Severance pay Sick pay (made by third party) Work uniform allowances Meal money in the event of late work Davis-Bacon wages: Payments by an employer into third-party trusts for the Davis-Bacon Act or similar prevailing wage law provided the pension trust is qualified under IRC Sections 401(a) and 501(a) would be excluded from Workers Compensation payroll. Employee discounts on goods purchased Your costs for group insurance premiums, for workers moving expenses and for contributions to workers benefit plans such as employee savings plans, retirement plans and cafeteria plans (IRC 125) Residual payment on pre-filmed commercials Wages of your workers who reject workers compensation coverage The value of special rewards for individual invention or discovery Tips and other gratuities employees receive Reimbursed travel expenses (verifiable records required) Wages paid to corporate officers over and above the maximum reportable salary requirements What s Reportable? What s Not? 3

4 Overtime All overtime payment should be reported at the regular rate of pay, not the additional amount the policyholder may use to entice the worker to work. In other words, if you pay an employee for five hours of overtime, your payroll report should include the extra five hours at the regular rate of pay. Classification Codes Standard Exceptions All businesses are assigned a basic classification code that best describes them. However, some occupations are common in so many businesses that special classification codes were established. Employees in these occupations are not included in a basic classification unless specifically noted. If you have employees in Clerical Office, Drafting, Sales or Collection, or Clerical Telecommuters, please contact your agent for more information. Clerical Office Employees Code 8810 This applies to workers who create or maintain financial or other employer records, handle correspondence, computer composition, technical drafting and telephone duties, including sales by phone. Qualified clerical personnel may also perform certain specific incidental non-clerical duties that take them away from your place of business, such as banking, picking up or delivering mail and purchasing office supplies. The definition of clerical duties excludes outside sales or outside representatives; any work exposed to a business s operational hazards; physical labor; and work, such as stock or tally clerk, that is necessary, incidental or related to business operations other than a clerical office. A clerical office is considered to be a work area that is separated and distinguishable by walls, partitions, counters or other physical barriers from all other work areas and hazards of the business. It excludes work or service areas; locations where inventory is kept and/or products are displayed for sale; and areas where a purchaser brings the product for payment. Drafting Employees Code 8810 These are workers who are engaged exclusively in drafting and confined to office work. However, the entire payroll of any drafting employee exposed to other operations is assigned to the highest-rated classification code of the operations to which he or she is exposed. 4 Your Payroll

5 Salespersons or Collectors Code 8742 These are employees engaged in sales or collection duties away from your premises. The classification does not apply to employees who deliver merchandise; they are assigned a classification applicable to that risk even though some of them also may collect or sell. Note: Automobile salespersons (Code 8748) engage in duties onsite and away from the business. These workers are subject to the same rules and treatment as salespersons or collectors outside, for the purposes of this rule, and are assigned to Code Clerical Telecommuter Employees Code 8871 These are employees whose duties are clerical in nature (as referenced for Code 8810) but are performed in an office or designated, defined location within their own homes. The home office must be separated and distinct from your business location. Subcontractors Subcontractors and their workers generally are considered employees of the general contractor if the work being performed is a part or process of the employer s regular business. In order to eliminate premium obligations for subcontractors, the subcontractor should provide evidence of workers compensation insurance; or if a sole proprietor or single member partnership, a waiver of workers compensation; or an independent contractor agreement that complies with ARS Section (D). The status of a subcontractor as an employee or independent contractor is legally complex and questions should be directed to your agent or to Copperpoint. What s Reportable? What s Not? 5

6 Corporate Officers or Partners The National Commission on Compensation Insurance (NCCI) and Arizona law have set rules and procedures for providing coverage to a sole proprietor, partner or corporate officers. Sole proprietors Workers compensation coverage for a sole proprietor owner is not automatic. If you are a sole proprietor, you must elect to be covered. CopperPoint, however, will decide whether we will provide the coverage after reviewing a written application. If accepted, the sole proprietor is considered to be an employee under Arizona s workers compensation law. Partners Workers compensation coverage for a partner owner also is not automatic. The same procedure that applies for a sole proprietor needs to take place. After CopperPoint reviews a written application and accepts the request for coverage, a partner is considered to be an employee under Arizona s workers compensation law. Officers of a corporation Corporate officers who actively work in the business are covered automatically as employees under the law, unless they choose to reject coverage. (For forms or information about rejection of coverage and what that means for employer and workers, contact your agent or CopperPoint.) Premium is based on their actual salary, which is subject to minimum and maximum limits that NCCI establishes. These limits are adjusted in accordance with NCCI s annual rate filing with the Arizona Department of Insurance. Because rate adjustments occur each Jan. 1, the limits become effective on existing policies at the time of renewal or are applied to new policies at inception. We recommend you contact CopperPoint prior to your policy s renewal date to determine any changes in reportable minimum or maximum limits. 6 Your Payroll

7 Family Members and Minors In Arizona, minors and family members are eligible for workers compensation coverage if they are employed for regular or temporary work. Operational Changes When a change in your operations occurs, it is your responsibility to contact us. Any change of this type could affect your work classification codes. Code additions or deletions may occur within your policy. Unreported operational changes that require a premium adjustment will be made during the audit and they could increase or decrease billing substantially, as the changes will be applied from the date the change occurred, not the date of the audit. Name or Ownership Change Please notify CopperPoint before you make any changes in your company s name or in ownership so we can discuss any coverage implications and possible policy changes with you (ownership form ERM-14). For example, when non-covered sole proprietors or partners form a corporation, the corporate officers will receive coverage automatically. If notification of the change is received before the change occurs, the policy endorsement will indicate the effective date of change. If the notification of an ownership change is received after it occurs, the endorsement will be effective on the date CopperPoint was notified. Mailing Address, Location, Phone Number Changes If you are making changes to your mailing address, location or phone number, please notify CopperPoint s Contact Center as soon as possible. This will allow us to update your policy and ensure that you continue to receive all pertinent information, such as payroll reports and general policy information. You can reach the Contact Center by calling or What s Reportable? What s Not? 7

8 CopperPoint is committed to providing workers compensation insurance expertise along with great customer service. Financially strong and service oriented, CopperPoint delivers Peace of Mind. Visit copperpoint.com for many of our services, including payroll and injury reporting, a Preferred Connection Network directory, as well as free safety videos and materials. Put CopperPoint to work for you. Contact Us Contact Center or CopperPoint Home Office 3030 N 3rd Street Phoenix AZ Office & Business Hours: CopperPoint customer service representatives are available to assist policyholders 8 a.m. 5 p.m., Monday Friday. If you have a question outside business hours, ask@copperpoint.com. CopperPoint customers across Arizona can contact CopperPoint through the phone numbers listed above. copperpoint.com A.M. Best assigned CopperPoint and its subsidiaries an A- Excellent XII with a stable outlook 2015 CopperPoint Insurance Companies. All rights reserved. This publication is produced by CopperPoint and may be used by its subsidiaries and affiliate companies. All rights to reproduce and distribute this material, and to license the distribution of this material, remain the sole property of CopperPoint. MC