Payroll Reporting

Workers' Compensation premiums are driven by payroll. Members of the Workers' Compensation Program report their payroll in arears, or after the exposure has already occured. The payroll is due on the 25th of the month following the end of the quarter in which the payroll was paid to staff. So for the first quarter of a Fiscal Year (July 1 to September 30), the payroll report is due on October 25. We have two basic classification codes for school employees. The first and most common is 8868 (School Professional Employees and Clerical) and 9101 (All Other Employees and Drivers).

Reporting payroll and calculating premium is pretty straight forward. However, where employees are classified and various unique things that schools deal with such as coaches and referees raise questions. 

Tips for Reporting Payroll for Workers’ Compensation Premium

What to Include 

Employee Regular Pay.

Overtime. Only the normal rate of pay earned during overtime hours is included. For example, if an FLSA non-exempt employee works 45 hours during a week and earns a regular hourly wage of $10 per hour, then $450 would be included for workers’ compensation reporting. This is different from unemployment reporting which requires the full regular time plus the time and half overtime rate for the hours worked in excess of the 40 hour work week.

Housing. An employee can and does turn in claims which describe the total compensation package they receive such as an annual salary, a house to live in (they estimate the value of the housing provided), and utilities. Thus, housing stipends of any kind are included for reported wages on your workers compensation report payroll reports.

Sick or Vacation Pay. Lump sum payments for unused sick or vacation pay.

Coaching - compensation.

Officiating (non-MOA referee) at sporting events is included, same as coaching pay. Referees will be under 9101 and coaches under 8868. You cannot be an employee part of the day, and an independent contractor another part of the day. If officials for your school sporting events come from the MOA (Montana Officials Association) pool they are not considered employees of the school district and do not need to be reported on your WC payroll report.

Ticket Taker or Special Help for Sporting events – 8868 (9101 for referees) If the district pays people to perform these services at sporting events or special school functions from athletic or special funds (other than regular payroll), these payments for services need to be included as these are temporary employees of the school district in most situations. Just add on the amounts paid in total for the quarter to the regular payroll report figure when reporting to your workers’ compensation carrier.

Bus Drivers – For bus drivers who are contracted out, you must include their wages under 9101 unless you have either proof that they have work comp coverage on themselves, or you have a copy of their Independent Contractor Exemption Certificate (ICEC) from the Department of Labor.

Employee contributions (not employer contributions) to Health and Dental Insurance and Annuities. Make sure you don’t double count this - for example, if a teacher is paid an annual salary of $30,000 and part of that $30,000 they use to pay for their employees share of health or dental premiums you would only include the total $30,000 for that employee for the year.

Retirement - If for example a teacher elects to have 10% of their annual salary withheld from their paycheck and placed into a retirement account then that amount would be included as wages. In that example say the annual salary was $30,000. The total amount withheld from the teacher’s salary that was placed into the retirement account would be $3,000. The total amount of wages that would be reported to the WC carrier would be $30,000.

Helpful Hint (for items not listed on this reporting tips list). If it’s included on the employees W2 as taxable income, it is considered reportable for workers’ comp payroll.


What to Exclude

Retirement – If the employer contributed say 5% to the retirement account of the employee and this contribution did not represent any employee contribution then the 5% or “employer” contribution to the retirement account would not be included on the WC payroll report.

Early Retirement Incentive Bonus

Health/Dental Insurance. Employer contributions to Health and Dental insurance plans are excluded. Employee contributions are not excluded. Thus, if an employee pays part of the cost whether that is pre-tax or not, it needs to be considered as part of the employees overall compensation. Do not double report as noted above. An example that might create double reporting would be if a teacher makes $30,000 a year as a salary and selects health insurance and/or dental coverage through their district plan. If they contribute $100 a month into an employer flex plan and use it to pay their premium contribution requirement, the business should only report $30,000 as the reported earnings for that employee.

Annuity Contributions. Again employer contributions to a qualified plan are not included for premium. However employee contributions are still included in their gross pay. Same type of example as above – regarding the warning about not double reporting items on your workers’ compensation report.

Payouts for termination such as Severance Pay.

Travel Reimbursements are excluded as long as the employee turns in receipts, and as long as the expenses are reasonable and incurred on company business.

Referees from the MOA pool are not included and are legitimate Independent Contractors that are providing a professional service. However, they must provide proof of independent contractor status.

Meals provided to employees in the school cafeteria would not be included as part of their compensation. These are viewed as incidental to the food service activity being conducted by the district and are not considered as an includable item. 

Applying Payroll by Classification Code

All employees hired by a member must have their payroll reported to the WCRRP under the proper classification codes. The classifications for employees covered under the plan are 8868 - College or School Professional Employees and Clerical, and 9101 - College or School All Other Employees and Drivers. In general, the following employees would be reported under the 8868 classification - College or School Professional Employees and Clerical:

Superintendents

Principals

Teachers/Coaches

Counselors

School Board Clerks

Business Officials/Directors

Nurses

Secretaries

Payroll Clerks

Attendance Clerks

Classroom Aides (who may also assist on the playground

Department Director/Supervisors of Instruction Curriculum and Personnel

Other department directors/supervisors may also be classified under the 8868 classification. Such directors/supervisors must be classified as professional employees under a written job description and must not take part in any day-today physical activities of the department supervised.

Generally, all other employees of the member should be reported under classification code 9101 - College or School All Other Employees and Drivers. If a classroom aide is hired just specifically for playground activities and does not work in the classroom, their payroll is reported under 9101.

Splitting Payroll between Class Codes

If a school district has a person working two different positions and those two positions are in different class codes, the payroll needs to be split. The school should do a best estimate on the percentage of the work that is done in the two different jobs, use a system to track that split, and ensure it ties to the WC reports produced. We see examples of this for teachers who work in the summer as a groundskeeper or in maintenance - those splits are a bit easier due to the different times of year, and at times the summer work is paid via a separate contract. We have also seen it with a teacher who works as a maintenance person in the evenings. Again, determine a reasonable method to split the wages between the two codes and keep good records to ensure your WC reports tie back to that system.