Are You Aware of the New Payroll Cap for Workers’ Compensation in New York?

As a New York contractor, staying on top of regulatory changes is crucial for managing your business effectively. One recent change affecting your bottom line is the new payroll cap for workers’ compensation calculations. Effective July 1, 2024, the payroll cap for workers’ compensation in New York is $1,757.19 weekly. Understanding how this cap impacts your premium calculations and ensuring compliance during audits can lead to substantial savings. This article will explore these aspects, providing examples and highlighting specific considerations for different employee categories.

Understanding the Payroll Cap

The payroll cap means that only a portion of an employee’s (contractors in field, not office staff) weekly wage, up to $1,757.19, is considered for workers’ compensation premium calculations. Any wages above this cap are excluded from the premium calculations. This regulation is designed to help reduce employers’ overall premium costs. Contractors must ensure that during audits, any payroll exceeding the weekly cap is accurately excluded from calculations.

Example 1: Employee Earning $2,000 Per Week

For an employee earning $2,000 per Week:

  • Included in premium calculations: $1,757.19
  • Excluded from premium calculations: $242.81

In this scenario, even though the employee earns $2,000 weekly, only $1,757.19 will be used to calculate your workers’ compensation premiums—the remaining $242.81 needs to be excluded, lowering premium charge for that employee.

Example 2: Employee Earning $2,500 Per Week

For an employee earning $2,500 per Week:

  • Included in premium calculations: $1,757.19
  • Excluded from premium calculations: $742.81

In this scenario, even though the employee earns $2,500 weekly, only $1,757.19 will be used to calculate your workers’ compensation premiums—the remaining $742.81 needs to be excluded, lowering premium charge for that employee. This payroll cap provides a significant saving on your workers’ compensation costs.

Example 3: Employee Earning $3,000 Per Week

For an employee earning $3,000 per Week:

  • Included in premium calculations: $1,757.19
  • Excluded from premium calculations: $1,242.81

In this scenario, even though the employee earns $3,000 weekly, only $1,757.19 will be used to calculate your workers’ compensation premiums—the remaining $1,242.81 needs to be excluded, lowering premium charge for that employee. This payroll cap provides a significant saving on your workers’ compensation costs.

Annual Payroll Calculations and Audit Considerations

Regarding annual payroll calculations, contractors need to ensure that each employee’s excess payroll is deducted from the gross payroll during audits. This means that for every employee earning above the weekly cap, the excess amount, when annualized, should be excluded from the workers’ compensation calculations.

For instance, for an employee earning $2,000 per Week, the excess of $242.81 per week translates to $12,621.12 annually. This amount should be deducted from the gross payroll for accurate premium calculations.

Special Considerations for Owners and Executives

Owners and executives who classify themselves as salespersons under class code 8742 or executive officers under class code 8809 and who do not perform any field work or supervision have a different payroll cap. For these individuals, the payroll cap is $2,650 per week or $137,800 annually. Any payroll above this cap is excluded from workers’ compensation premium calculations, which can lead to additional savings.

Example for Owners and Executives

If an executive officer earns $3,000 per Week:

  • Included in premium calculations: $2,650
  • Excluded from premium calculations: $350

This exclusion amounts to $18,200 ($350 x 52 weeks) deducted from the premium calculations annually, ensuring savings for the business.

Ensuring Compliance During Audits

Contractors need to ensure that payroll workers’ compensation caps are accurately excluded from premium calculations during workers’ compensation audits. This practice helps maintain compliance and manage costs effectively. Proper documentation and meticulous payroll records are crucial during these audits to identify and exclude all excess payrolls.

How BGES Group Can Help

Navigating the complexities of workers’ compensation insurance, especially with payroll caps, can be challenging. BGES Group specializes in construction insurance and has extensive experience helping New York contractors manage and reduce workers’ compensation premiums.

Our expert understands the unique needs of the construction industry and is dedicated to providing personalized service to help you find the best insurance solutions. By working with BGES Group, you can ensure that you are taking full advantage of the payroll cap and other cost-saving measures.

Comprehensive Services and Expertise

BGES Group offers a wide range of services tailored specifically for contractors, including:

  • Detailed audit reviews to ensure compliance and accuracy.
  • Strategic advice on managing workers’ compensation costs.
  • Customized insurance solutions that fit your unique business needs.
  • Ongoing support and consultation will help you stay ahead of regulatory changes.

We aim to provide you with the tools and knowledge to minimize workers’ compensation premiums while maintaining compliance with state regulations.

Contact Us Today

Don’t let changes in workers’ compensation laws catch you off guard. Contact Gary Wallach at BGES Group today to learn more about how we can help you lower your workers’ compensation premiums. Call 914-806-5853 or email bgesgroup@gmail.com for a consultation and start saving on your insurance costs now.

Staying informed and working with specialists like BGES Group can make a significant difference in managing your business’s insurance expenses. Let us help you navigate these changes and keep your costs under control.

By partnering with BGES Group, you can ensure that your workers’ compensation premiums are as low as possible, allowing you to focus on what you do best—running a successful construction business.

BGES Group is one of New York, New Jersey, and Connecticut’s Construction Insurance Specialists representing 50+ companies, including all the BEST general & umbrella liability programs. We offer all the coverage needed, including property, builders’ risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability, and group health.  Our commitment to you goes beyond the policies we provide. We are always just a call, text, or email away, ready to assist you, even on weekends. We understand the importance of your business and are here to help you navigate any insurance challenges.

BGES Group are Workers’ Compensation Insurance Specialists for Tri-State Business Owners: Unhappy with your rates, company, being canceled, losses causing difficulty getting coverage, in the middle of an audit dispute, misclassified payrolls, or whatever your issue. We can help!  We have special programs for Auto Services, Contractors (especially in New York), Limousine Services, Logistics Companies, Manufacturers, Recyclers, and Truckers; we can help ANY tri-state business owner.  We are considered “Preferred Agents” for this one program that, if we can get you into, their pricing is excellent, offers long-term coverage stability, and can cover multi-state operations. The program takes the hassle out of doing annual audits, too. 

If you would like to speak with us, call Gary Wallach at 914-806-5853, click here to email, or click here to visit our website.

Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538

email: bgesgroup@gmail.com

website: http://www.bgesgroup.com

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