You don't want to pay more than you have to for the things you need to run your business, especially for workers' compensation insurance.
By careful preparation and a little extra effort, you may be able to reduce your workers' compensation costs. In most instances, if you have more than one classification on your insurance policy, and your employees shift duties between those classifications, you can use verifiable time records to separate and report the payroll of the employees in more than one job classification on the payroll report.
Here's how to do it:
- Keep a record of the total daily, weekly, or monthly hours worked by each employee who works in more than one job classification. The records must be completed each day by the employee or direct supervisor.
- For salaried employees, convert the salary to an hourly, daily, weekly, monthly, or yearly rate. Multiply that rate by the time the employee spent performing each job classification in the time records.
- Include a brief description of the work in each job listed. (This enables us to verify correct classification assignment.) We cannot accept estimated percentages or ratios.
- Total the record by class code. Have your bookkeeper/accountant summarize all records for a given pay period and convert them into payroll dollars.
- Allocate on a pro-rata basis the payroll for holidays, nonexcludable bonuses, sick pay, travel pay (and all other forms of payroll not directly attached to a specific job classification) to the various job classifications applicable to the employee. Or, you may assign this payroll to the highest-rated job classification applicable to the employee.
Farms with more than one classification shown on their policies may split employee wages by classification using one of the two following methods:
Method 1: Calculate a ratio of crop acreage in each class compared to the total acreage:
- Add all the acreage with crops subject to each class
- Divide the class acreage by the total acreage, including pasture and grazing acres.
- Multiply the percentage for each class by the reportable payroll to obtain the payroll to be reported in each class.
Method 2: Keep verifiable records of hours spent by each employee in each crop or activity.
Only one of the two methods may be used, and all employees must be reported using the same method. The choice of methods is generally left to the employer but there are a few agricultural class codes that require use of the second method.
Maintaining verifiable time records does take some extra work, but it will be worth the effort if it lowers workers' compensation costs for your business. Remember, if an employer chooses not to divide employee work by job classification, Oregon Administrative Rules require an employee's wages to be reported under the highest classification applied to any part of the employee's duties.
(See OAR 836-042-0060)