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Premium Audit: Definition of Payroll


The definition of payroll taken from the Basic Manual For Workers Compensation and Employers Liability Insurance is as follows:

For purposes of this manual, payroll means money or substitutes for money.

1. Includes:

  1. Wages or salaries (including retroactive wages or salaries).

  2. Total cash received by an employee for commissions and draws against commissions.

  3. Bonuses including stock bonus plans.

  4. Extra pay for overtime work except as provided in Rule 2-C-2.

  5. Pay for holidays, vacations, or periods of sickness.

  6. Payment by an employer of amounts that have been withheld from employees to meet statutory obligations for insurance or pension plans such as the Federal Social Security Act or Medicare.

  7. Payment to employees on any basis other than time worked, such as piecework, profit sharing or incentive plans.

  8. Payment or allowances for hand tools or hand-held power tools used by employees in their work or operations for the insured. These tools may be supplied directly by the employee or to the employee through a third party.

  9. The rental value of an apartment or house provided to an employee based on comparable accommodations.


  1. The value of lodging, other than an apartment or house received by an employee as part of their pay to the extent shown in the insured's records.

  2. The value of meals received by employees as part of their pay. This must be shown in the insured's records.

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

  4. Payments for salary reduction, employee savings plans, retirement or cafeteria plans (IRC 125) that are made through employee-authorized salary reduction from the employee's gross pay.

  5. Davis-Bacon wages or wages from a similar prevailing wage law.

  6. Annuity plans.

  7. Expense reimbursements to employees to the extent that an employer's records do not confirm that the expense was incurred as a valid business expense.

    Exception: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 $30 per day, is permitted.

  8. 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. More...

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