Worker’s Compensation Inclusion/Exclusion Guidelines

These guidelines were provided by The Hartford for use by Millennium service bureaus. Please direct all questions concerning these guidelines to The Hartford for clarification.

Note the portions of this document that are highlighted in green are the rules that are automatically implemented by Millennium. The text following these rules that is colored in blue explains what indications are used to implement the rules in Millennium.

Basis of Premium – Total Remuneration

1. Premium shall be computed on the basis of the total remuneration paid or payable by the insured for services of individuals who could receive workers compensation benefits for work-related injuries as provided for by the policy.

Some classifications have a different premium basis. For example, premium for domestic worker classifications is computed on a per capita basis.

Exceptions

Nevada: Premium shall be computed on the first $36,000 remuneration.

If the employee work state is set appropriately

Remuneration – Definition of Payroll

Remuneration means money or substitutes for money.

Inclusions

2. Remuneration includes:

a)  Wages or salaries including retroactive wages or salaries;

b)  Total cash received by employees for commissions and draws against commissions;

c)  Bonuses including stock bonus plans (see)

d)  Extra pay for overtime work (see)

e)  Pay for holidays, vacations, or periods of sickness

f)  Payment by an employer for amounts otherwise required by law to be paid by employees to statutory insurance or pension plans;

g)  Payment to employees on any basis other than time works; piecework, profit sharing, or incentive plans;

h)  Payment or allowance for tools used by hand provided by employees either directly or through a third party and used in their work or operations for the insured;

i)  The rental value of an apartment or a house based on comparable accommodations;

j)  The value of lodging, other than an apartment or house, to the extent shown in the insured’s records;

k)  The value of meals received by employees to the extent shown in the insured’s records;

l)  The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay;

m)  Payments for salary reduction, employee savings plans, retirement, or cafeteria plans (IRC 125) that are made through employee-authorized salary reduction deductions from the employee’s gross pay;

n)  Davis-Bacon wages paid to employees or placed by an employer into third-party pension trusts;

o)  Annuity plans;

p)  Expense reimbursements to the extent that an employer’s records do no substantiate that the expense was incurred as a valid business expense;

q)  Payment for filming of commercials;

Exclusions

3. Remuneration excludes:

a)  Tips and other gratuities received by employees;
If earning type of Banquet Tips, Cash Tips, Charged Tips

b)  Payments by an employer:

  1. To group insurance or group pension plans for employees,
    If earning type of MemoERMatch
  2. Into third-party pension trusts for the Davis-Bacon Act or a similar prevailing wage law,

c)  The value of special rewards for individual invention or discovery;

d)  Dismissal or severance payments except for time worked or accrued vacation;

e)  Payments for active military duty;

f)  Employee discounts on goods purchased from the employee’s employer;

g)  Expense reimbursements to employees to the extent that an employer’s records substantiate that the expense was incurred as a valid business expense;

h)  Supper money for late work;

i)  Work uniform allowances;

j)  Sick pay paid to an employee by a third party;
If earning type of 3PSP-LT, 3rd Pty Sick, Memo 3PSP-NT

k)  Employer-provided perquisites:

  1. Use of an automobile;
  2. An airplane flight;
  3. An incentive vacation (e.g. contest winner);
  4. A discount on property or services;
  5. Club memberships;
  6. Tickets to entertainment events.

l)  Employer contributions to salary reduction, employee savings plans, retirement, or cafeteria plans If earning type of MemoERMatch

Exceptions

Alaska:

3.b.(2) not applicable.

Arizona:

2.j and 2.k are not applicable.

Add to section 2.p:

  1. Record may consist of receipts or other evidences of meals and other incidental expenses that are available and making reasonable estimates predicted thereupon, or
  2. Verifying the miles actually traveled and coordinating same with recognized industrywide allowance schedules or with generally accepted meal and incidental expense allowances.

California:

2.k. Value of meals or lodging is not included in the premium computation unless: the classification prescribes otherwise; wages are reduced by an amount equal to the value of the meals or lodging; or meals or lodging are provided instead of wages.

3.1 Employer contributions to stock purchase plans and deferred compensation plans are also excluded from remuneration. If earning type of Memo

3.k The value of an automobile furnished to an employee is not included in the payroll, provided the automobile is used in the conduct of the employer’s business. An automobile allowance paid to an employee shall be included in the payroll; however, that portion of the allowance that the employer can show to be reimbursement for actual expenses incurred by the employee.

Colorado:

Replace 3.b(2): The value of Davis-Bacon Act fringe benefits provided separately by the employer trust fund are to be excluded from remuneration for payroll purposes.

Replace 2.n. Davis-Bacon Act wages paid directly to an employees shall be considered remuneration for payroll purposes.

Delaware:

2.e. Includes accrued sick time.

2.h. Omit “either directly or through a third party.”

Add 2.n. Musicians and entertainers who are not independent contractors shall be included in computation of premium hotels or restaurants (maximum of $250 per week)

Add 2.o. Adjustments necessary to bring employees to minimum wage shall be included.

3.b.(2) Payments to a Group Insurance, Pension Plan, or to an employee directly in lieu of the foregoing because of the Provisions of Delaware Prevailing Wage Act, Davis-Bacon Act.

3.k.(1) Omit “use of”.

3.k.3 does not apply.

Add 3.m. Stock Option plans – difference between market value of stock and lower option price is not included as remuneration.

2.m. Employee savings plans not addressed.

Florida:

2.n. is not applicable.

3.a. Tips received from persons other than the employer constitute part of the employee’s earnings, remuneration shall include the actual wages paid by the employer plus the value of board and lodging, if furnished, but such remuneration shall in no event be less, per employee, than the “Average Weekly Wage.”

3.c. Remuneration shall not include special reward for meritorious achievements or discovery, nor pure gratuities, nor the result of voluntary profit sharing arrangements.

Georgia:

3.k. is not applicable.

Kansas:

2.n. is not applicable.

2.m., 2.o., 2.p., and 2.q. are not applicable.

2.d. Accrued vacation is not excluded.

Add to 3. Exclusions: Pay for holidays, vacations, or periods of sickness, provided the insured’s books and records are maintained to show such pay be employee and in summary by classification.

Kentucky:

2.h. is not applicable.

Louisiana:

Add the following to 3.c.: shall not include special reward for meritorious achievements or discovery, nor pure gratuities, nor the result of voluntary profit sharing arrangements.


Maine:

Add 2.r. Fringe benefits, when developed as a wage substitute through collective bargaining process.

Massachusetts:

2.m. Employee savings plans are not addressed.

2.p. is not applicable.

3.b. (2) is not applicable.

3.1. is not applicable

Michigan:

Omit “either directly or through a third part” 2.h.

2.m., 2.o., 2.p., and 2.q. are not applicable.

3.e. and 3.f. are not applicable.

3.k. is not applicable.

Montana:

2.k. subject to a minimum amount of $3.50 per week per employee for lodging and section 2.j. is subject to a minimum amount of $1.50 per day per employee for meals.

2.p. is not applicable.

Add the following 2.r.: For volunteer firefighters who are enrolled and active members of a fire company, wages shall be based on the number of volunteer hours worked during the policy period of each firefighter times the average weekly wage divided by 40 hours, subject to a maximum of 1.5 times the state average weekly wage.

Add to 3.a.: in excess of those documented to the employer for tax purposes;

New Jersey:

2.h. Omit “either directly or through a third party”

Add gratuities and travel time to 2.

2.n., 2.p., and 2.q. are not applicable.

3.a. Gratuities are included except when specifically excluded in the classification wording.

3.b. Payments made under a formal and established sickness or personal employee benefit program for unused times paid at retirement or termination of employments are excluded.

3.e. and 3.f. do not apply.

3.k. is not applicable.

Oklahoma:

2.m. Remuneration does not include the amount adjusted pursuant to salary adjustment agreement of an eligible employer participating in the flexible benefits plan under Title 74 O.S.

Oregon:

2.n. Replace with Davis-Bacon wages paid to employees.

3.k.(1) applies.

Add to 3.b.: or payroll amounts picked up by employers under the Public Employee’s Retirement System (PERS), or equal plans authorized under ORS 237.620, known as “PERS pickup.”

Add 3.m. Vacation pay, bonus which is paid at the sole discretion of the employer, amounts payable under profit sharing agreements, or payments that are part of a program to reward workers for safe working practices.

Pennsylvania:

2.e. Includes accrued sick time

2.h. Omit “either directly or through a third party”.

Add 2.n. Musicians and entertainers who are not independent contractors shall be included in computation of premium of hotels or restaurants (maximum of $250 per week)

Add 2.o. Adjustments necessary to bring employees to minimum wage shall be included.

2.n. replace “or placed by an employer into third-party pension trusts” with “based on federal government specified minimum wage rates.”

2.m. Employee savings plans not addressed.

3.b.(2) Payments to Group Insurance, Pension Plan or to an employee directly in lieu of the foregoing because of the Provisions of the Pennsylvania Prevailing Wage Act, Davis-Bacon Act.

3.k.(1) omit “use of.”

3.k.3 does not apply.

Add 3.m. Stock option plans – difference between market value of stock and lower option price is not included as remuneration.

Nevada:

Add to 2.i.: The rental of such apartment or house subject to minimum of $150.

Add to 2.j.: The value of such lodging is subject to a minimum of $50 per month.

Add to 2.k.: The value of such meals is subject to a minimum of $1.50 per meal or $5.00 per day.

2.d.: not applicable.

Replace 2.q.: Payment for filming of commercials that are earned by the commercial’s participant(s).

Add 2.r.: Tips or other gratuities received by employees;

Add 2.s.: Dismissal or severance payments;

Add 2.t.: Payments for active military duty.

3.a., 3.d., and 3.e. do not apply.

Replace 3.k. (1): Use of an automobile for business purposes only;

New Mexico:

Add 3.m. Bonuses paid by an employer under a safety program approved by the Superintendent of Insurance in accordance with the provisions of Section 92, “Safety Program – Bonus to Worker,” of the New Mexico Workers Compensation Act. Per Diem employee expense reimbursements unless such reimbursement is considered wages for federal income tax purposes.

South Dakota:

Add to 3. Exclusions: Pay for holidays, vacations, or periods of sickness provided the original records of the insured disclose these amounts.

Texas:

2.n. through 2.q. do not apply.

Add 2.m. Allocated business expenses such as housing, automobile, clothing,

Add 2.n. Automobile mileage allowance in excess of IRS guidelines;

Add 2.o. Per Diem allowances in excess of IRS guidelines.

3.e.: Does not apply

Excluded on remuneration upon approval by TDI.

e)  Reimbursements for business expenses such as automobile, meals, lodging, etc.

f)  Safety awards received by employees in accordance with the employer’s written adopted accident prevention plan.

g)  Employee wages diverted into a third party pension trust or plan for the exclusive and irrevocable benefit of the employee (Davis-Bacon Act Wages).

“perks” may be excluded as remuneration upon approval by TDI.

3.f.: Safety awards received by employees in accordance with the employer’s written adopted accident prevention plan.

Wisconsin:

2.n.: Wages paid to employees as salary in conjunction with the Davis-Bacon Act or other prevailing wage laws.

Overtime

1.  Definition

Overtime means those hours worked for which there is an increase in the rate of pay:

a)  For work in any day or in any week in excess of the number of hours normally worked, or

b)  For hours worked in excess in 8 hours in any day or 40 hours in any week, or

c)  For work on Saturdays, Sundays, or holidays.

Note: Forms of incentive pay commonly referred to as “shift differential” or “premium pay” associated with working other than the normal day shift hours during the standard workweek are not to be considered overtime.

2.  Exclusion of Overtime Payroll

a)  Payroll Records

The extra pay for overtime shall be excluded from the payroll on which the premium is computed as indicated in (1) or (2) below, provided the insured’s books and records are maintained to show overtime pay separately by employee and in summary by classification.

1.  If the records show separately the extra pay earned for overtime, the entire extra pay shall be excluded.

2.  If the records show the total pay earned for overtime (regular pay plus overtime pay) in one combined account, and time and one-half is paid for overtime, 1/3 of this total shall be excluded. If double time is paid for overtime and the total pay for such overtime is recorded separately, ½ of the total pay for double time shall be excluded.

If the earning type is set to OT, then the rate multiplier is assumed to indicate the overtime premium

Exceptions:

California: Overtime remuneration does not include: extra pay for swing, graveyard shifts, for working certain hours on the clock, or incentive or bonus pay figured on volume without regard to hours worked.

Delaware, Nevada, Pennsylvania, & Utah- Rule not applicable

If the employee work state is set appropriately

New York: In the case of guaranteed wage agreements, overtime means only those hours worked in excess of the number specified in such agreement. Premium wages paid for night shift work do not constitute overtime within the provision of this rule.