Understanding Payroll for Workers' Compensation in New Jersey

Definition of Payroll for Workers' Compensation

In New Jersey, payroll for workers' compensation includes all compensation paid to employees that is subject to the state's insurance premium calculation. This primarily covers regular wages, overtime, bonuses, commissions, and the cash value of most benefits such as vacation pay, sick leave, and holiday pay.

Components Typically Included

The following items are generally counted as payroll for workers' compensation purposes:

• Hourly and salary wages
• Overtime pay
• Piece‑rate earnings
• Bonuses and commissions
• Paid vacation, holiday, and sick leave
• Cash value of severance or termination pay
• Tips reported to the employer

Items Usually Excluded

Not all payments to employees are considered payroll for workers' compensation. Common exclusions are:

• Employer contributions to health, dental, or vision insurance
• Retirement plan contributions (e.g., 401(k) matches)
• Reimbursements for business expenses
• Non‑cash fringe benefits such as gym memberships

How Payroll Is Calculated

Employers must total the included compensation for each employee over the policy period, usually a calendar year. The sum is multiplied by the class‑specific rate set by the New Jersey Compensation Rating and Inspection Bureau (CRIB). Premiums are then adjusted for experience rating, which reflects the employer's claim history.

Reporting Requirements

New Jersey requires employers to file an annual payroll report with the CRIB by March 31 for the preceding year. The report must detail total payroll, broken down by job classification, to ensure accurate premium assessment.

Sample Payroll Table