Payroll or not Payroll

DSP · PayPerShop Newbie Joined: 08 Apr 2008 Posts: 3

That is my question. I need some help please. What is NOT considered part of payroll?

Ian Congreave · Posted: Wed Apr 09, 2008 7:03 am Post subject: Payroll or not Payroll

Welcome to the PayPerShop forum and thank you for your question.

Can you please clarify your question? For example: Is your question asked in the context of UK payroll practice, or elsewhere? Do you mean, what activities may be undertaken by a payroll department, such as HR activities or accounts work? Or are you asking whether a payroll department should get involved in reporting benefits and expenses? Or something else?
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DSP · PayPerShop Newbie Joined: 08 Apr 2008 Posts: 3

paypershop · Site Admin Joined: 16 Feb 2004 Posts: 20

As you are based in the US, you will see that I have moved your post to the US Payroll Practice forum.

Being much more familiar with UK payroll than with US payroll, I'm not sure that I fully understand the question. I suspect that the answer will depend on the rules of your state's Workers' Compensation scheme, so it would be useful to let us know which state we are talking about.

If I understand the situation correctly, the employer is required to pay 12% of salary and the WC scheme will cover the salary if he is injured. As his earnings are much higher as a result of the profit sharing, you want to know if the 12% has also to be paid on the profit sharing element but, if it is, it looks as if the scheme would not cover that. Do I understand that correctly?

I am happy to look at the WC scheme rules if you can let us know which state scheme applies, but I would have thought it would be easier just to contact the scheme and discuss the situation with them.
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Greetings from Ian Congreave

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DSP · PayPerShop Newbie Joined: 08 Apr 2008 Posts: 3

I am in Louisiana.

The WC fee is approximately 12% of total payroll, which according to our WC company, includes all bonuses, commission, and profit sharing. They do cover his regular salary, but does not cover the profit sharing if he is injured. He has to be on the policy to work on the job site.

I have spoken with several people at the Dept of Labor "Worker's Comp" division (scheme), and all they could do is referred me to the Commissioner of Insurance. I spoke with someone there, who said I had to talk to the attorney at the Commissioner of Insurance office. I spoke to the attorney there and she said I should call the Agency from which we got the policy through. I spoke with him and he did not know. I spoke to the WC Ins Company and the girl checked with auditing and that is who said that bonuses, commission, and profit sharing are part of payroll.

Thank you for trying to help us.

Deborah

Ian Congreave

This is a difficult area for me but, as far as I can see from the various sources I have looked at, chapter 23 of the Workers' Compensation Act bases a person's compensation on the annual salary, divided by 52 - as you say, this does not take the profit share payments into consideration. In contrast, it appears to be up to the WC carriers to define "payroll" and yours includes everything, including profit share payments.

So, there is a conflict there - your carrier has to pay out compensation based only on salary, but charges premiums based on far more than salary.

My suggestion is that you need to challenge your WC carrier about this inconsistency. Is "payroll" defined in the WV Act? - not that I can see. So why are they including pay elements that are not taken into consideration when paying compensation?
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