Construction Employment Payroll Limitation Program

The New York State Legislature enacted the Construction Employment Payroll Limitation Law to provide a more equitable distribution of workers’ compensation premium between high-wage paying and low-wage paying employers in the construction industry. The Construction Employment Payroll Limitation Program applies a maximum payroll limitation for employees in eligible construction classification codes for the purposes of determining workers’ compensation insurance premiums.

Construction Employment Payroll Limitation Program Overview
Eligible Classifications
Record Keeping Requirements
Territories & Differentials/Surcharges
NYSIF's Guide to the Construction Employment Payroll Limitation Program
Sample Payroll Limitation Worksheet

Construction Employment Payroll Limitation Program Overview

The Payroll Limitation Program affects any policyholder endorsed with construction classification codes, except for work involving one- or two-family houses. The program affects premium in two ways:

  • A payroll cap is applied to actual weekly payroll, per employee, in each of the eligible construction classification codes;
  • The program creates three geographic rating territories used in calculating premiums and surcharges.

Actual payroll, and not the limited payroll, is used for employments engaged in the construction of one- or two-family housing (residential work). Premiums for these operations are determined based on traditional methods (total payroll, without territorial surcharges). Documentation must be provided (contracts, invoices, etc.) verifying the type of work performed.

Companies involved in both residential and commercial work are subject to the law for their commercial operations. Only construction work on one- or two-family detached or semi-detached (no more than two attached units) houses is exempt. Any construction work on apartment houses, co-operatives, three-family-or-more residences, mixed-use one- and two-family dwellings, farms and attached (three or more units in a group of connected houses) townhouses or brownstones is subject to the payroll limitation law, regardless of whether the work is done for an individual owner, a renter, the building owner, or the building manager.

Territorial differentials apply to casual labor and uninsured sub-contractors performing commercial work.

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Construction Employment Payroll Limitation Law - Eligible Classification Codes

0042 5069 5223 5479 5610 6216 6319 9534
3365 5102 5348 5480 5648 6217 6325 9539
3724 5160 5402 5491 5651 6229 6400 9545
3726 5183 5403 5506 5703 6233 6701 9549
3737 5184 5428 5507 5709 6235 7536 9553
5000 5188 5429 5508 6003 6251 7538
5022 5190 5443 5536 6005 6252 7601
5037 5193 5445 5538 6017 6254 7855
5040 5213 5462 5545 6018 6259 8227
5057 5221 5473 5547 6045 6260 9526
5059 5222 5474 5606 6204 6306 9527

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Maximum chargeable payrolls

Weekly payroll cap amounts and effective dates are as follows:
Effective dateWeekly Payroll Cap
7/1/2010 $1,109.75 per week per employee
7/1/2011 $1,159.44 per week per employee
7/1/2012 $1,188.10 per week per employee
7/1/2013 $1,204.81 per week per employee
7/1/2014 $1,212.98 per week per employee
Thereafter New York State average weekly wage

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Construction Employment Payroll Limitation Law Record Keeping Requirements

Detailed bookkeeping is important under the Payroll Limitation Program. Weekly payroll records must be kept showing each employee’s earnings separately. Each employee’s payroll must be separated by:

  • Classification (type of work performed)
  • Hours worked
  • Regular pay
  • Overtime pay
  • Gross pay
  • Residential work pay (one- or two-family homes)
  • Commercial work pay (non-residential)
  • Geographic location (applicable territories for non-residential work)
  • Holiday, sick, vacation and bonus pay must be shown separately

Documentation such as contracts, invoices and daily work reports must serve as verification for your payroll separation.

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Territories & Differentials/Surcharges

The Payroll Limitation Program creates three geographic rating territories used in calculating premiums and applying differentials/surcharges, adjusted annually, to offset premiums lost to the limitation in each region. For new policyholders, NYSIF applies the differential/surcharge of your home territory unless you provide documentation of work in a different territory. There are three New York territories:

Territory 1
Bronx, Kings, New York, Queens and Richmond counties;
Territory 2
Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester counties;
Territory 3
All other counties within the state.

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Sample Payroll Limitation Worksheet

One form cannot meet the needs of all policyholders but if you don't have a Payroll Limitation worksheet that fits your specific needs, this one accounts for most situations.

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