Underwriting – Construction Employment Payroll Limitation Program
This program applies a maximum payroll limitation to determine workers’ compensation premium. The law does not apply to construction work involving one- or two-family houses. For your convenience, a Payroll Limitation Worksheet is available to assist you with limiting payrolls.
Maximum Chargeable Payrolls
The maximum chargeable payroll limitation is a function of New York State’s average weekly wage and is updated on an annual basis.
|Effective date||Weekly Payroll Cap|
|7/1/2020||$1,450.17 per week per employee|
|7/1/2021||$1,594.57 per week per employee|
|7/1/2022||$1,688.19 per week per employee|
Eligible Classification Codes
The legislation that created the payroll limitation program also created three territories to calculate premium and apply differentials/surcharges, however no territorial differentials currently apply.
Employers engaged in the construction of one- and two-family residential housing, as well as in remodeling, repairs, and maintenance on existing one- and two-family structures (e.g., 5645) are exempt.
Recordkeeping and Audits
- Payroll records must be kept by individual employee
- Payroll records must be kept on a weekly basis for the individual employee
- Payroll records must be kept by territory for the individual employee
- Payroll records must be kept by type of work performed by the individual employee
- All contracts must be furnished at time of audit
- When using subcontractors, records must indicate the territory in which work was conducted
- Payroll must be separated between commercial and residential work. (Residential work is defined as the construction of one- and two-family residential housing, as well as remodeling, repairs, and maintenance on existing one- and two-family structures.)
- Appropriate overtime credit will be deducted prior to applying the payroll cap
- Wrap up payroll will be deducted prior to applying the payroll cap
- Payroll records must be kept for a period of four years after each entry
- New York State Department of Taxation Form # NYS–45–CC must be filed. (Insureds whose primary business is not construction will not receive this tax form.)
- Failure to maintain a proper separation of payroll will result in your paying a higher premium since payroll will be assigned to the highest-rated code and territory, and the savings for capping payroll will be lost