Workers' compensation overview

Alerts and notices

You can find a list of available workers' compensation classification codes (or classes) and descriptions for each state in the Workers' Compensation Codes screen. In the Workers' Compensation tab of the Setup > Clients screen, you can select codes that your client has been assigned along with an associated rate for each code. The codes and rates are made available for any states in which the client does business - meaning all states that are available to them in the Payroll Taxes tab of the Clients screen.

Setting up workers' compensation codes for the client

See: Setting up workers' compensation information for a client

Setting up an employee for workers' compensation

See: Adding workers' compensation information to an employee record

Excluding payroll items from workers' compensation calculations

  1. Choose Setup > Payroll Items, select the client at the top of the screen, and then highlight the appropriate payroll item in the Payroll Items list.
  2. Click the Main tab and click the Edit button.
  3. In the Exclusions section, choose whether to exclude all, selected, or no jurisdictions from workers' compensation calculations for this payroll item.

    Note: Choosing the Selected option makes the Ellipsis Ellipsis button button available. Click the button to open the Workers Compensation Exclusion Details dialog, where you can select the jurisdictions to be excluded from workers' compensation calculations.

Calculation details for Workers' Compensation

This section explains how the application calculates workers' compensation amounts, explains the terms used in the description, lists any state-specific calculation differences, and provides an example of how the application calculates workers' compensation amounts.

How it calculates on payroll checks

  • Gross Wages - Excluded Wages - Excluded Overtime Premium = Subject Wages
  • Workers' Compensation Rate * Experience Rating = Adjusted Workers' Compensation Rate
  • Subject Wages * Adjusted Workers' Compensation Rate = Adjusted Premium Amount

Example

Gross Wages = $1500.00
Excluded Wages = $500.00
Excluded Overtime Premium = $250.00
Experience Rating = 75.00%
Workers' Compensation Rate = 1.0%
  • $1500.00 - $500.00 - $250.00 = $750.00 Subject Wages
  • 1.0% * 75.00% = 0.75% Workers' Compensation Adjusted Rate
  • $750.00 * 0.75% = 5.625 Adjusted Premium Amount

How it displays on the Detailed Workers' Compensation report

  • Gross Wages - Excluded Wages - Excluded Overtime Premium = Subject Wages
  • Subject Wages * Workers' Compensation Rate = Premium Amount
  • Premium Amount * Experience Rating = Adjusted Premium Amount

Example

Gross Wages = $1500.00
Excluded Wages = $500.00
Excluded Overtime Premium = $250.00
Experience Rating = 75.00%
Workers' Compensation Rate = 1.0%
  • $1500.00 - $500.00 - $250.00 = $750.00 Subject Wages
  • $750.00 * 1.0% = $7.50 Premium Amount
  • $7.50 * 75.00% = 5.625 Adjusted Premium Amount

Definition of terms

  • Gross wages. The total wage amounts of all pay items on a payroll check (minus any items that are set up to be excluded from gross pay).
  • Excluded wages. Any pay item that has been set up in the Setup > Payroll Items screen to be excluded from workers' compensation for a particular state or for all states.
  • Overtime premium. The portion of premium pay (half time in most cases) for all overtime amounts. Most states exclude this, although a few do not (refer to the state-specific exceptions section).
  • Subject wages. The base wage amount from which workers' compensation is calculated.
  • Premium amount. The full premium amount due, before multiplying by the experience rating.
  • Experience rating. A rating system used by employers that can either raise or lower the premium amount due based on the client's policy history and risk.
  • Adjusted premium amount. The Premium amount after it has been adjusted by the experience rating.

State-specific calculation differences

Certain states differ from the usual calculations.

  • Washington - Washington state uses hours worked to calculate the workers compensation premium amounts (also referred to as Washington L&I) instead of wage amounts. Washington SDI tax is calculated the same way, using the employer and employee rate entered in the Worker’s Compensation Tab of the Setup > Clients screen and an active Worker's Compensation code in the Workers' Compensation tab of the Setup > Employees screen. 
  • The following states exclude accruable benefits from their Workers' Compensation calculations.
    • Kansas
    • Oregon
    • South Dakota
    • Washington

Excluding accruable benefits from workers' compensation calculations

  1. Choose Setup > Accruable Benefits. Select the client at the top of the screen, and click the Edit button.
  2. Highlight the appropriate accruable benefit in the Accruable Benefits list.
  3. In the Exclusions section, choose whether to exclude all, selected, or no jurisdictions from workers' compensation calculations for this benefit.

    Note: Choosing Selected makes the Ellipsis button button available. Click the button to open the Workers Compensation Exclusion Details dialog, where you can select the jurisdictions to be excluded from workers' compensation calculations.

Running a Workers' Compensation report

  1. Choose File > Print Reports.
  2. Double-click either the Workers' Compensation - Condensed report or the Workers' Compensation - Detailed report (both in the Payroll folder) to move it to the Selected pane.
  3. With the report highlighted in the Selected pane, choose the appropriate report options on the right side of the screen.
  4. Preview or print your report by clicking the appropriate button.

    Note:

    • The Workers' Compensation reports list only the payroll checks that are entered after workers' compensation information has been set up for the client.
    • For more information about printing reports, please review the Printing reports and report profiles procedure.

State workers' compensation limits

Click the link for a state to view the workers' compensation limit amount, the effective date of the limit, and any additional information regarding the limit. States not listed here do not have workers' compensation limits.

You can choose Officer as the Reporting Type in the Personal tab of the Setup > Employees screen.

  • Limit. $133,900.00
  • Effective date. 1/1/2019
  • Additional information. Affects codes 7610, 9151, 9156, 9181, and 9610 and officers.
  • Limit. $140,400.00
  • Effective date. 6/1/2019
  • Additional information. Affects officers that elect coverage and only under the DIP plan. The limit is $2,700 per week or $140,400.00 per year. 
    Note: Codes 970 and 991 are subject to a separate $60,000 per year limit.
  • Limit. $55,120.00
  • Effective date. 1/1/16
  • Additional information. Affects officers. The limit is $1,060.00 per week or $55,120.00 per year.
  • Limit. $104,000.00
  • Effective date. 1/1/2019
  • Additional information. Affects officers. The limit is $2,000.00 per week or $104,000.00 per year.
  • Limit. $224,016.00
  • Effective date. 1/1/2019
  • Additional information. Affects officers and codes 9178 and 9179. The limit is $4,308.00 per week or $224,016.00 per year.
  • Limit. $93,600.00
  • Effective date. 4/1/2018
  • Additional information. Affects officers and codes 9178 and 9179. The 2018 limit is $1,398 per week or $93,600 per year. 
  • Limit. $36,400.00
  • Effective date. 7/1/2019
  • Additional information. Affects all codes.
  • Limit. $134,680.00
  • Effective date. 1/1/2019
  • Additional information. Affects officers and codes 7610, 9178, 9179, 9610, 9156, 9186. The limit is $2,590.00 per week or $134,680.00 per year.
  • Limit. $36,000.00
  • Effective date. 1/1/1995
  • Additional information. Affects all codes.
  • Limit. $114,400.00
  • Effective date. 10/1/2019
  • Additional information. Affects officers. The limit is $2,200.00 a week or $114,400.00 per year.
  • Limit. $74,100.00
  • Effective date. 7/1/2019
  • Limit. $74,100.00. The Bureau of Workers' Compensation (BWC) weekly employee cap limits are outlined on their website.
  • Additional information. Affects the following codes:
    0042, 0050, 0106, 1322, 3365, 3719, 3724, 5020, 5022, 5037, 5040, 5057, 5059, 5069, 5102, 5146, 5160, 5183, 5188, 5190, 5213, 5215, 5221, 5222, 5223, 5348, 5402, 5403, 5437, 5443, 5445, 5462, 5472, 5473, 5474, 5478, 5479, 5480, 5491, 5506, 5507, 5508, 5535, 5537, 5551, 5605, 5606, 5610, 5645, 5651, 5703, 5705, 6003, 6005, 6017, 6018, 6045, 6204, 6206, 6213, 6214, 6216, 6217, 6229, 6233, 6235, 6236, 6237, 6251, 6252, 6260, 6306, 6319, 6325, 6400, 7538, 7601, 7605, 7611, 7612, 7613, 7855, 8227, 9534, and 9554. The limit is $74,100.00 or $1,425 per week.
  • Limit. $132,600.00
  • Effective date. 4/1/2019
  • Additional information. Affects officers. The limit is $2,550.00 per week or $132,600.00 per year.
  • Limit. $62,400.00
  • Effective date. 4/1/2006
  • Additional information. Affects codes 9178, 9179, 9186, and 4360 and officers. The limit is $1,200.00 per week or $62,400.00 per year.
  • Limit. $171,600.00
  • Effective date. 11/1/2018
  • Additional information. Affects officers.
  • Limit. $79,248.00
  • Effective date. 1/1/2019
  • Additional information. Affects officers. The limit is $1,524.00 per week or $79,248.00 per year.

Preferred partners - The Hartford and InsurePay

Thomson Reuters has developed a preferred-partner relationship with both The Hartford Financial Services Group, Inc. (XactPAY) and InsurePay to accommodate your need for pay-as-you-go workers' compensation insurance for your live payroll processing clients.

InsurePay overview

XactPAY overview


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