Separating Payroll Can Reduce Costs

Keeping records that reflect your company’s actual activities can help reduce costs and avoid surprises during your audit. MyAudit Toolkit provides you with a quick overview of how best to avoid unanticipated audit issues. For a more detailed review, see below.

If your policy has more than one classification code, show payroll separately for each classification to take advantage of applicable lower-rated classifications. Otherwise, all payroll may be assigned to the highest rated classification, which may result in a higher premium.

Use the following guidelines to help you separate payroll to lower costs.


The extra portion of overtime pay, known as premium pay, is excluded from premium charges. For example, if a worker earns $10 per hour during regular hours and earns $15 (time and a-half) during overtime hours, the extra $5 premium pay is not included in the total pay. To receive credit, separate overtime properly for each worker, and show the total for each classification.


NYSIF can apply more than one construction classification code to your business and to each of your eligible employees, provided work for the intended codes is not incidental to the work specified in a contract for a job or location. To be eligible for possible lower-rated classifications, payroll must be separated for each worker by classification based on actual time worked (not by percentages). To verify your payroll separation, the auditor will review applicable records, including, but not limited to, contracts and invoices. See Construction Policyholders Special Circumstances for more information.

The Construction Payroll Limitation Program also helps reduce your premium by applying a weekly payroll cap, per employee, based on eligible classification codes. 

Wrap-Up Jobs

It is important for policyholders who work on wrap-up jobs to have these jobs properly endorsed for exclusion from the policy when work begins. Doing so will assist in making the audit go smoothly and ensure that we are charging the proper premium. During the audit, the auditor will separate payrolls for unendorsed wrap-up jobs but will include them in the charges. The charges will be removed when proof of coverage for these jobs is provided to our Underwriting department, and the policy is endorsed to exclude them.

The Construction Industry Fair Play Act sets legal guidelines that determine whether individuals who perform work for you can be considered independent contractors or your actual employees. For more detailed information, see Identifying Independent Contractors.

At your audit, you should make available workers’ compensation Certificates of Insurance for subcontractors that show proof of coverage. This can help you to avoid being charged for these subcontractors.

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