Last updated: October 2026

Workers Comp Payroll Report: What Your Carrier Expects

Sloppy payroll reporting inflates your workers comp premium.

A workers comp payroll report is the document your insurer uses to calculate your premium, either each pay period under pay-as-you-go billing or at year-end during the audit. Carriers want gross wages broken down by classification code, but not all dollars count the same. Overtime premiums and subcontractor labor both follow specific inclusion or exclusion rules. Report the wrong number, and you pay a premium on wages that should never have been counted.

What Goes Into a Workers Comp Payroll Report

In Texas, payroll for premium includes commissions, bonuses, and pay for holidays, vacations or periods of sickness. It also includes the value of lodging, and of meals received as part of pay to the extent your records show it. Leaving items off your report does not make them disappear. New York's State Insurance Fund asks for your payroll book, payroll tax returns and general ledger at the audit.

In New York, if your payroll is not separated by classification, all of it may be assigned to the highest rated classification. Keep time records by job function, not just by employee.

How the Overtime Premium Exclusion Works

The overtime premium, meaning the extra half-time portion of time-and-a-half pay, is excluded from reportable payroll in Texas and New York. Only the straight-time equivalent counts.

An employee earning $30 per hour who works 10 overtime hours receives $450 in overtime pay ($30 x 1.5 x 10). For workers comp reporting, you include $300 (the straight-time value of those 10 hours) and exclude the $150 premium.

In New York, your records must show overtime separately for each worker, totaled by classification, to get the credit. Texas asks for the same records, but where overtime pay is recorded as one combined amount, one third of it is excluded.

Subcontractor Labor: When It Lands on Your Policy

New York's State Insurance Fund includes uninsured subcontractors in your policy, and you pay the premium for them. If you cannot produce a sub's certificate of insurance at the audit, the fund recalculates your premium to include them in your payroll. A general contractor hiring four uninsured subs at $50,000 each just added $200,000 to their reportable payroll.

A certificate of insurance shows active coverage as of its date, according to the fund. A sub who was insured when the job started may have let their policy lapse mid-project. The fund advises validating certificates periodically to confirm coverage is still active.

Legitimate sub exclusions require more than a 1099.

In Florida construction, a person a contractor pays as a subcontractor counts as the contractor's employee unless the sub has secured its own coverage or validly elected an exemption.

Pay-as-You-Go Reporting vs. Year-End Audit Reporting

Pay-as-you-go workers comp pulls payroll data each period, usually every pay cycle, and adjusts your premium in near real time. Year-end audit reporting uses estimated payroll at the start of the policy and reconciles against actual payroll after the policy term ends. The difference is timing, not substance.

The tradeoff is granularity. Pay-as-you-go requires accurate payroll data every cycle, which means your classification codes and overtime breakdowns need to be correct from day one. Review your reported payroll against your carrier's records quarterly, not just at renewal.

Your Next Steps to Get This Right

Pull your most recent premium audit worksheet and compare it against the rules above. Start with the overtime premium exclusion. Verify that your payroll system produces a report separating overtime premiums from straight-time wages, and confirm that your experience modification rate reflects your actual claims history, not stale data.

Collect current certificates of insurance from every subcontractor on your active projects. Check expiration dates against your payment records. Use our workers comp audit preparation guide to build a complete checklist before your auditor arrives.

Talk to your broker about switching to pay-as-you-go billing if your workforce fluctuates seasonally.

This is not legal or financial advice. Consult a qualified professional for your specific situation.