A. BASIS OF PREMIUM: TOTAL REMUNERATION

Premium is the amount an insurer charges to provide the coverage described in the policy.

Premium is calculated based on the total remuneration paid by the employer for the services of employees who are eligible for New York State workers’ compensation benefits as provided by the policy.

Exception(s):

  1. The following classifications have a premium basis other than total remuneration.
    ClassificationPhraseologyPremium Basis
    0908
    0909

    0912

    0913
    Domestic Workers – Inside – Occasional
    Domestic Workers – Outside – Occasional –
       Including Occasional Chauffeurs
    Domestic Workers – Outside –
       Including Private Chauffeurs
    Domestic Workers – Inside
    Per Capita
    9027Building Operation – Dwelling or Combined Dwelling and Commercial Occupancy – Not More Than One Story Used for Commercial PurposesPer Location
    7711Firefighters – Volunteer & DriversPopulation
    7716Firefighters – Volunteer & Drivers – Elective Coverage for Assistance from Individual Volunteer FirefightersPer Policy
    7370Ambulance Operation: Volunteer Ambulance Service CompanyPer Ambulance
  2. Premium for certain construction classifications is computed based on limited remuneration.
  1. Definition

    Compensation or substitutes for compensation are forms of remuneration.  These terms are used interchangeably in all rules, classifications and endorsement references, and all shall mean remuneration.

  2. Inclusions
    1. Wages or salaries including retroactive wages or salaries;
    2. Charitable Institutions – any money or lodging received by any individual providing services to a charitable institution is to be considered remuneration for premium determination purposes;
    3. Consumer Cooperatives – computation of replacement wages for unsalaried members of a consumer cooperative who may be entitled to workers’ compensation insurance benefits shall be based upon a formula using the actual number of hours worked by each member. The actual hours worked are then multiplied by a replacement value equal to the minimum of an hourly wage that would ordinarily be paid to a salaried employee performing the same or similar duties in the community where the work is performed.  The classifications to be used are the same as the classifications that would apply to a paid employee;
    4. Deficiency or Retroactive Wages – deficiency or retroactive wage payments are to be included as remuneration for premium determination purposes for the policy term(s) in effect to which the wage payments apply.  These payments can be included only for the policy period in which the wage payment was made and for the preceding twelve-month period, if applicable;
    5. Volunteer Remuneration – if volunteers in for-profit corporations are employed by such entity to perform work in connection with the operations of the employer, the work performed is subject to a minimum amount equal to the wages that would ordinarily be paid to another employee performing the same or similar work.  If no other employees perform similar work, the carrier is to apply an appropriate replacement wage.  This amount shall be included in the basis of premium computation.  Volunteers for non-profits are ordinarily not covered unless an election is made;
    6. Hospitals – Volunteer Workers – when insurance is provided for volunteer workers performing duties in hospitals, whether for-profit or not-for-profit, the premium for these volunteer workers is to be based upon the same wage rate that would be paid to a regular employee performing the same or similar work.  Such volunteer workers shall also be assigned to the classification applicable to such regular employees;
    7. Relatives of Individuals, Copartners or Corporate Officers – if a spouse or relative of an individual proprietor, member of a co-partnership, or an officer of a corporation is employed by such entity to perform work in connection with the operations of the employer, the actual remuneration of such relative or spouse, subject to a minimum amount equal to the wages that would ordinarily be paid to another employee performing the same or similar work, shall be included in the basis of premium computation.  If the records fail to disclose remuneration, the minimum specified above shall be included as remuneration;
    8. Travel Time – Payments made by an employer to an employee representing compensation for time spent traveling to or from work, or to or from a specific job, are to be considered as remuneration and assigned to the manual classification which applies to the work normally performed by such employee;
    9. Expenses Which Are Not Incidental to Employment – Payments made by an employer to an employee, which are not incurred as incidental to the employer’s business, are to be considered as remuneration and assigned to the manual classification which applies to the work normally performed by such employee;
    10. Total cash received by employees for commissions and draws against commissions;
    11. Bonuses including stock bonus plans;
    12. Extra pay for overtime work except as provided in Section (E) of this Rule;
    13. Pay for holidays, vacations or periods of sickness.  Refer to Rule IV Section (F)(2) of this Manual for allocation of remuneration for employees subject to more than one classification code;
    14. Payment by an employer for amounts otherwise required by law to be paid by employees to statutory insurance or pension plans, such as the Federal Social Security Act;
    15. Payment to employees on any basis other than time worked, such as piecework, profit sharing or incentive plans;
    16. Payment or allowance for hand tools or power tools used by hand provided by employees either directly or through a third party and used in their work or operations for the insured;
    17. The rental value of an apartment or a house provided for an employee based on comparable accommodations, including any rent reductions;
    18. The value of lodging, other than an apartment or house, received by employees as part of their pay, to the extent shown in the employer’s records;
    19. The value of meals received by employees as part of their pay to the extent shown in the employer’s records;
    20. The value of store certificates, merchandise, credits or any other substitute for compensation received by employees as part of their pay.  Refer to exclusions below for certain fringe benefits that are not considered to be remuneration;
    21. Payments for salary reduction, health savings accounts, flexible spending accounts, employee savings plans, employee contributions, retirement or cafeteria plans (IRC 125); which are made through employee authorized salary deductions from the employee’s gross pay, other than noted exclusions;
    22. Davis-Bacon wages or wages from a similar prevailing wage law paid directly to an employee;
    23. Annuity plans;
    24. 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;

      Note: When it can be verified that the employee was away from home overnight on the business of the employer, but the employer did not maintain verifiable receipts for incurred expenses, a reasonable expense allowance, limited to a maximum of $75 for each such day, will be permitted.  The remaining reimbursements of non-verifiable expenses are included as remuneration.

    25. Payment for filming of commercials excluding subsequent residuals which are earned by the commercial’s participant(s) each time the commercial appears in print or is broadcast.
    26. Payout of deferred compensation to current employees from an employer’s contributions to previously deferred payroll.

      Example: The payout of an employer’s contribution from a non-qualified deferred compensation plan to the extent these payments are available in payroll records.

      Rationale: Payouts are considered additional income.

    27. Payment by an employer in connection with an employee’s cashless exercise of stock options.

      Note: A cashless exercise is the purchase of shares of stock from a company by using the proceeds of a pending sale.

      Example: An employee uses his or her options to buy shares of stock, which they simultaneously sell in order to pay the exercise cost, transaction fees and any withholding taxes due at exercise. They may sell all the shares and retain any remaining cash or sell just enough shares to pay all costs and then keep the remaining shares. For example, an employee exercises his or her option to purchase 1,000 shares of XYZ Corp. at $2.00 per share and then immediately sells these shares in the market for $5.00 per share. The employee uses the proceeds of the sale to pay the purchase costs of the shares of stock.

      Rationale: Cashless exercises of employee stock options are completed without making a cash payment. The company essentially lends the employee the money needed for the option exercise for the fraction of a second that the employee owns the shares.

    28. The amount by which an employee’s salary is reduced to fund a pension, deferred compensation plan, equity-based compensation plan, Qualified or Non-Qualified Employee Stock Purchase Plan (ESPP), stock options or other employee-elected deferral plan, when earned, even though such plan is a portion of a cafeteria plan.

      Rationale: Since employees’ salary dollars fund these plans, those dollars should count in the payroll base to determine premium.

    29. The amount by which an employee’s salary is reduced to contribute to the purchase of stock options or Qualified or Non-Qualified Employee Stock Purchase Plans (ESPP), when earned.

      Rationale: Since employees’ salary dollars contribute to these plans, those dollars should count in the payroll base to determine premium.

    30. The value of equity-based compensation plans (other than Stock Options and Stock Purchase Plans), including but not limited to Stock Transfers, Stock Warrants, Restricted Stock, Restricted Stock Units, Phantom Stock Plans and Stock Appreciation Rights, shall be included at the time of vesting when vesting is on a scheduled or annual basis, such as graded vesting or scheduled cliff vesting, or when vesting is based on the achievement of performance goals or milestone anniversaries.

      Note: Amounts contributed by employees are not to be double counted.

      Rationale: Easily verifiable by audit.

    31. The amount by which an employee’s salary is reduced to contribute to an equity-based compensation plan.

      Rationale: Since employees’ salary dollars contribute to these plans, those dollars should count in the payroll base to determine premium.

  3. Exclusions
    1. Tips and other gratuities received by employees;
    2. Payments by an employer to group insurance or group pension plans for employees, other than payments covered by Section (B)(2)(n) and (u) of this Rule;
    3. The value of special rewards for individual invention or discovery;
    4. Dismissal or severance payments except for time worked or accrued vacation;
    5. Reimbursed expenses and allowances paid to employees shall be excluded, provided all three of the following conditions are met:
      1. The expenses or allowances were incurred in the course of the employer’s business;
      2. The amounts are shown separately for each employee in the employer’s records; and
      3. The amount of each expense reimbursement or allowance payment approximates the actual expenses incurred.
    6. Payments for active military duty, including subsistence allowance paid by the federal government to veterans in training;
    7. Employee discounts on goods purchased from the employee’s employer;
    8. Meal allowance when working late;
    9. Work uniform allowances;
    10. Sick pay paid to an employee by a third party such as an insured’s group insurance carrier which is paying disability income benefits to a disabled employee;
    11. Employer provided perquisites (“perks”) such as:
      1. 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;
      7. Educational assistance; and
      8. Relocation and moving expenses.
    12. Employer contributions to salary reduction, employee savings plans, retirement, or cafeteria plans (IRC 125); contributions made by the employer, at the employer’s expense, that are determined by the amount contributed by the employee; and
    13. Payout of deferred compensation to retired or terminated employees who are not employed during the current policy period, provided the employer maintains records that segregate such payments.

      Example: The payout from a non-qualified deferred compensation plan to a retiree.

      Rationale: Retired / terminated employees are not reflective of the employer’s current policy exposure.

    14. Employer contributions in connection with:
      1. Qualified or Non-Qualified Employee Stock Purchase Plans (ESPP)
      2. The exercise of stock options, other than the cashless exercise of stock options
      3. Deferred compensation plans

      Rationale: This is in line with industry practice of not counting these employer contributions in the payroll base to determine premium.

    15. The difference between the market price of stock and any discounted price paid by the employee.

      Rationale: This is in line with industry practice of not counting these amounts in the payroll base to determine premium.

    16. The market value of equity-based compensation plans shall not be included as remuneration when accelerated cliff vesting is triggered by (1) an Initial Public Offering (IPO) of stock, or (2) a change in majority ownership where the owners(s) prior to the change own less than one-half interest after the change.

      Example: A change in majority ownership could include a merger or acquisition if the owner(s) prior to the change own less than a one-half interest after the change.

      Rationale: This recognizes that these types of payouts are infrequent, possibly once in lifetime events. As such, they should not trigger a significant increase in premium for a given policy year that is not commensurate with the exposure.

  4. Wages Paid for Time Not Worked
    1. Idle Time

      The entire amount of wages paid for idle time is to be included as remuneration.

      Wages for idle time, due to the following circumstances, are to be assigned in their entirety to the classification which applies to the work normally performed by the employee involved:

      1. Suspension or delay of work due to weather conditions;
      2. Delays while waiting for materials;
      3. Delays while waiting for another contractor to complete certain work;
      4. Delays arising from the breakdown of equipment;
      5. “Stand-by” time where employees such as operators of cranes, hoists or other equipment are on the job, but they are not continuously working;
      6. Special union requirements or agreements between an employer and his/her employee when this employee is paid for idle time;
      7. Holidays or vacation periods;
      8. Inability of non-striking employees to perform duties due to other employees who are on strike.  If non-striking employees perform absolutely no work for their employer and are not present at their employer’s premises or job sites during a strike period, their remuneration shall be assigned to Code 8810 Clerical Office Employees, provided adequate records are maintained by the employer; and
      9. Other causes of a similar nature.
    2. Wages Paid to Key Employees

      When there are no jobs in progress, wages of key individuals of construction, erection, or stevedoring, such as superintendents, foremen or engineers are assigned to the classification applicable to the work the individual would have performed if the job were in progress.

      Exception:

      If work of key employees consists exclusively of drafting or other office work, or if the employee is completely idle, wages are to be assigned to Code 8810.  Code 8810, however, is not available for office time of an Executive Supervisor who qualifies for Code 5606, since it is normally expected that such an employee will spend a considerable portion of his/her time performing office work.

    3. Idle Time Other than by Construction, Erection or Stevedoring

      The entire amount of wages paid for idle time to an employee engaged in work other than construction, erection or stevedoring must be assigned, without division of payroll, to the classification which normally applies to that employee.

    4. Temporarily Reassigned Employees Payments made to employees temporarily reassigned as a result of a request or direct order by civil authorities are to be reported to Code 8873 “Telecommuter Reassigned Employees” for the actual duration of the reassignment, not to exceed thirty (30) days after the expiration or revocation of the aforementioned order by civil authorities.
      Code 8873 applies to employees who are unable to report to their regular place of business at the instruction of civil authorities and are either:
       
      1. idle and not performing any work duties; or
      2. performing clerical work duties at home.
         
      Separate payroll records must be kept for this reclassification to be authorized.

C. ESTIMATED PAYROLLS

  1. Estimated Payrolls by Classification

    For each classification shown on the Information Page, the total estimated annual payroll shall be stated in the column headed “Premium Basis Total Estimated Annual Remuneration.”

  2. Determination of Estimated Payrolls

    Estimated payrolls shown on the Information Page shall reflect actual remuneration anticipated by the insured during the policy period.  Such estimates shall be subject to substantiation by records or inspections.

D. WHOLE DOLLAR: REMUNERATION

All remuneration shall be shown to the nearest dollar. A remainder equal to or greater than $.50 shall be rounded to the next higher dollar.

E. OVERTIME

  1. Definition

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

    1. For work in any day or in any week in excess of the number of hours normally worked; or
    2. For hours worked in excess of 8 hours in any day or 40 hours in any week; or
    3. For work on Saturdays, Sundays or holidays.

    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 provisions of this Rule.

  2. Exclusion of Overtime Remuneration

    The extra pay for overtime shall be excluded from the remuneration based on which premium is computed as indicated in (a), (b), or (c) below, provided the employer’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 overtime pay shall be excluded.
    2. If the records show the total pay earned for overtime (regular pay plus overtime pay) in one combined amount, one-third (1/3) of this total pay shall be excluded.
    3. If double time is paid for overtime and the total pay for such overtime is recorded separately, one-half (1/2) of the total pay for double time shall be excluded.

    Exception to (2) above:

    Exclusion of overtime pay does not apply to remuneration assigned to any classification under the caption “Stevedoring” with a code number followed by the letter “F.”

F. PAYROLL LIMITATION: OTHER THAN CONSTRUCTION CLASSIFICATIONS

Payroll limitation in workers’ compensation typically applies only to sole proprietors, executive officers, partners, and employees in certain noted classifications.

  1. Other Than Construction Classifications Contained in Rule V (G)
    1. To Whom Payroll Limitation Applies

      This rule applies to executive officers, members of LLC’s, partners, and sole proprietors, and to classifications with notes that indicate “maximum remuneration.”

      Employers with payroll in the following classifications are subject to payroll limitation:

      761091579178
      828091589179
      907191599186
      907491609610

      Exception: For Code 9071 “Restaurant – Full Service – Including Entertainers and/or Musicians” and Code 9074 “Bar, Dance Club, Lounge, Nightclub or Tavern – including Entertainers and/or Musicians,” the payroll limitation only applies to the entertainers or musicians.

    2. When Payroll Limitation Applies

      Payroll limitation applies after applying all remuneration inclusions and any exclusions and after any deductions of extra pay for overtime.

      When applying the payroll limitation rule, the “total time employed during the policy period” of any employee shall be considered to be the sum of the portions of all contracts of employment of such employee falling within the policy period.

    3. How Payroll Limitation Applies

      For classifications with notes which indicate maximum remuneration, the payroll on which premium is based shall exclude the part of the employee’s average weekly pay in excess of the applicable weekly limitation, provided:

      Refer to “Miscellaneous Values” of Part Three – Loss Costs of this Manual for current weekly maximum amounts.

      1. Books and records are maintained to show separately the total payroll earned by each employee whose average weekly pay for the total time employed during the policy period exceeds the weekly payroll limitations;
      2. Separate records are maintained in summary by classification for such employees; and
      3. For multi-state risks, the excess payroll deduction is determined by state, by classification and by individual employee, combining the gross payroll for the states approving such limitation and computing a total percentage excess deduction factor to be applied to such payrolls by classification.
  2. Partial Weeks

    Partial weeks are considered full weeks when determining average weekly pay.  

G. PAYROLL LIMITATION: CONSTRUCTION EMPLOYMENT CLASSIFICATIONS

The New York State Insurance Law, Section 2304 (“Payroll Limitation Law”) applies a maximum payroll limitation for eligible construction classification codes but excludes employments engaged in the construction of one or two family residential housing.

An executive officer engaged in the construction of commercial structures and assigned to an eligible payroll limitation classification code is subject to the Payroll Limitation Law and not the executive officer minimum/maximum remuneration.

If the executive officer is engaged in employments of one or two-family residential housing, then Rule VIII Section (A)(6)(a)(i) thru (vii)of this Manual applies.

A sole proprietor or partner engaged in the construction of commercial structures and assigned to an eligible payroll limitation classification code is subject to the Payroll Limitation Law and not the sole proprietor or partner minimum/maximum remuneration.  If the sole proprietor or partner is engaged in employments of one or two-family residential housing, then Rule VIII Section (B)(4) of this Manual applies.

  1. To Whom Payroll Limitation Applies

    Employers with payroll in the following construction classifications, excluding any employments engaged in the construction of one or two-family residential housing, are subject to payroll limitation.

    Note: Construction, for purposes of this Rule, includes new construction, as well as remodeling, repairs, and maintenance of existing structures.

     
    00425069522354795606601862608227
    33655102534854805610604563069526
    37245160540254915648620463199527
    37265183540355065651621663259534
    37375184542855075701621764009539
    50005188542955085703622967019545
    50225190544355365709623375369549
    50375193544555386003623575389553
    5040521354625545600562517601 
    5057522154735547601762527855 
    505952225474     

     

  2. When Payroll Limitation Applies

    Payroll limitation applies after applying all remuneration inclusions and any exclusions and after any deductions of extra pay for overtime.

    For purposes of applying the payroll limitation rule, bonuses paid during the policy term must be earned during the policy term.

  3. How Payroll Limitation Applies

    For the classifications and employments specified in (1) above, an employer’s payroll shall be the actual weekly payroll per employee determined in accordance with the rules of this Manual.  This is subject to a maximum of the greater of the current New York payroll limitation value or the weekly wage upon which the maximum weekly benefit is based.  The payroll limitation value is typically updated annually.  Refer to “Miscellaneous Values” of Part Three – Loss Costs of this Manual for current weekly maximum amounts.

    Note:

    1. Actual weekly payroll per employee shall be used to determine the limited payroll for those construction classifications subject to this Rule.  Annual payroll cannot be divided by 52 weeks to arrive at a weekly payroll.  Payroll from construction of one or two-family residential housing shall be excluded from the employee’s weekly payroll prior to the application of any payroll limitation required by this Rule.
    2. If an employee is paid other than on a weekly basis, the employee’s remuneration is divided by the number of weeks
      For example:  The payroll amount for the employee earning $1,650 bi-weekly is divided by 2 to arrive at a weekly payroll and the appropriate payroll limitation is then applied to each week’s portion.
    3. If an employer does not provide sufficient employee payroll records necessary to segregate residential from commercial employments, no payroll limitation shall apply.
    4. An employee’s weekly earnings for payroll limitation purposes shall be assigned to the territory in which the majority of the week’s work was performed.
    5. If an employer whose employees perform work in more than one geographic territory, as defined in the “Miscellaneous Values” in Part Three - Loss Costs, is unable to provide sufficient employee payroll records necessary to identify employee payrolls by territory, all payroll will be assigned to the territory with the next highest premium differential to that of the employer’s home office or New York base of operations.

      Exception: In any case in which investigation of a specific job discloses that it was performed in the territory with the highest premium differential, all payroll shall be assigned to that territory.

    6. Employee payroll earned from work performed outside of New York State and utilized as New York payroll for premium determination purposes shall be assigned to the territory in which the home office or New York base of operations of the employer is located and will be subject to payroll limitation.
    7. Employees who perform shop work or driving are eligible for payroll limitation under this Rule only if such employees are included under the eligible classifications subject to “Payroll Limitation.”
    8. When payroll is available for uninsured subcontractors, payroll limitation, including the application of territory differentials, applies.
      When actual payroll is not available, and the contract price is used in lieu of payroll, as set forth in Rule VIII Section (C)(3) of this Manual, limited payroll does not apply. However, the territory differential applies to that portion of the contract price considered to be payroll.
    9. All rules pertaining to payroll limitation also apply to casual labor.   
    10. Commercial construction wrap-up projects are subject to payroll limitation.
  4. Partial Weeks

    Partial weeks are considered full weeks when determining average weekly pay.