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Workers' Compensation Overview

Overview

Workers' Compensation Insurance is a major expense for most employers. In some cases, workers' compensation costs exceed FICA and unemployment taxes combined. ProPay helps you track these costs, generate payments, and produce reports for insurance carriers.

What ProPay Tracks

ProPay's workers' compensation system tracks:

  • Classification codes assigned to each employee based on job type
  • Wages by classification for accurate premium calculations
  • Insurance carrier information including contact details and policy numbers
  • Premium accruals for monthly, quarterly, or annual reporting periods
  • Payment history to insurance carriers

Workers' Compensation Accrual Methods

ProPay supports two methods for accruing workers' compensation costs:

Employee-based

Workers' compensation costs are calculated based on each employee's job classification. Different employees have different classification codes and premium rates.

Example: A truck driver has classification code 7380 with a rate of $8.50 per $100 of wages, while an office worker has code 8810 with a rate of $0.35 per $100 of wages.

Job-based

Workers' compensation costs are calculated based on the job or project the employee is working on. The same employee may have different classification codes depending on which job they work.

Example: A manufacturer has all employees working on Job A under classification code 3632, and all employees on Job B under code 3076.

Note: Job-based workers' compensation requires that job costing be enabled in ProPay.

Setting Up Workers' Compensation in ProPay

Follow these steps to configure workers' compensation tracking:

Step 1: Enable workers' compensation

  1. Go to Employer > Employer Setup > Screen 2 (Company Preferences).
  2. Check the box Calculate Workers Comp Ins.
  3. If using job-based workers' compensation, also check Calculate W/C based on Jobs.
  4. Click Save.

Step 2: Set up your insurance carrier

Configure your workers' compensation carrier information, including contact details, policy numbers, and payment methods.

Step 3: Set up classification codes

Add workers' compensation codes for your state, including code numbers, descriptions, and premium rates.

Step 4: Assign codes to employees or jobs

  • Employee-based: Assign a classification code to each employee in Employee Add/Change.
  • Job-based: Assign a classification code to each job in Departments/Jobs > Jobs Master File Setup.

Step 5: Apply rates to prior periods

If you're setting up workers' compensation for an existing company with payroll history:

  1. Go to Dept/Jobs/WC > Work/Comp Codes.
  2. Click the button Apply W/C Rates to Prior Period.
  3. Enter the start and end dates for the period to recalculate.

This recalculates workers' compensation premiums for all prior payroll records within the specified date range.

Generating Workers' Compensation Payments

ProPay can automatically generate workers' compensation payments based on the schedule you configure:

  • Monthly - Payments generated on the last pay date of each month
  • Quarterly - Payments generated on the last pay date of each quarter
  • Yearly - Payments generated on the last pay date of the year

For more information, see Generate WC Payments.

Exporting Data to Insurance Carriers

Some insurance carriers accept payroll data electronically. ProPay can export workers' compensation data in formats supported by major carriers.

For more information, see WC Export Files.

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