Arkansas HVACR NewsMagazine May 2021

S tate, National, Chapter News State national Chapter News

Worker ’s Compensation Payroll Exclusion and Limitations

By Nick Hall Cross Pointe Insurance Advisors In Partnership with Arkansas HVACR Association

It is hard to believe that it is already May. I know the busy season is about to hit you all and hope that you have a safe and profitable summer. Our Tool this Month - Workers Compensation Payroll Exclusions and Limitations - may not necessarily make you a safer workplace, but it can directly save you money on your Workers Compensation Premium. It is too common for businesses to overpay on Workers Compensation Premium simply because they provide their total paid wages without realizing there are some wages that can be excluded or limited on the audit. The most commonly overlooked Payroll Exclusion is Overtime Pay. Did you know that Overtime Wages excess of an employee ’ s normal hourly wages can be excluded from Payroll on your Policy? As with most things, this varies by state and does not apply to every class code, but for HVAC Contractors in Arkansas, you can take advantage of this! Overtime wages are those for hours worked where there is an increase in the rate of pay for: • work in any day or week in excess of the number of hours normally worked, or

• hours in excess of 8 hours in any day, or 40 hours in any week, or • work on Saturdays, Sundays, or Holidays. Let’s go through a quick example to show you how this works. Employee John Doe has a wage agreement at $10/hr. – 8 hrs./day, 40 hrs./wk. – any hours worked above 8/hrs./day or 40hrs./wk., he can earn time-and-a-half pay or $15/hr. For our example, John worked 50 hours in one week. Earning Wages of: • 40 hrs. @ $10/hr. = $400 • 10 hrs. @$15/hr. = $150 • Gross Weekly Wages = $550 In this example, you would only have to report $500 on your Workers Compensation Audit, excluding the extra $50 John earned while working overtime and earning time-and-a-half pay. In effect, you can adjust the overtime wages back down to an employee’s normal hourly wages . Another common way many companies overpay on their Workers Compensation Premiums is by not Limiting Owners and Officers Payrolls . In Arkansas you can cap an