BY: Mark Ward, Payroll Experts, Inc

The payroll puzzle can become confusing as many different puzzle pieces come together.  Two puzzle pieces I’ll address in this article is Workers Compensation and State Unemployment.  Regularly I find many employers do not understand the difference between Workers Compensation Insurance and State Unemployment Taxes.  Hopefully I am able to clarify and bring understanding to how these two puzzle pieces come together.  I’ll explain what Workers Comp and State Unemployment are and how they affect your business and then provide guidance on how Payroll Experts can help. 

Workers Comp is:  Insurance coverage businesses are required to obtain that covers employees who are injured on the job.  Coverage will provide medical treatment, rehab and lost wages for the injured employee.  Workers Comp isn’t a payroll tax.  It is an insurance policy businesses must purchase.  Payroll Experts doesn’t purchase or pay the workers comp insurance premium for you.  However, we do have relationships with different carriers and can refer to you a solution that will work best for you and your business.  The cost is based upon what industry you are in, your workers comp claims history and your total wages paid to all employees.     

State Unemployment is:  A payroll tax employers pay.  Payroll Experts calculates, collects, and pays this tax on your behalf to the State’s Unemployment Division.  This tax then funds unemployment benefits that are paid out to terminated or laid off employees (unemployed people).    

Now that we have cleared up the confusion between Workers Comp and State Unemployment here is what Payroll Experts CAN DO to help you with Workers Comp premiums.  Workers Comp Insurance Policies can be purchased through many different insurance companies.  One Workers Comp insurance company that Payroll Experts works closely with is The Hartford.  Payroll Experts’ and The Hartford have partnered together to bring our clients the nation’s leading Pay-As-You-Go Workers Compensation Premium Payment Solution to pay for workers comp premiums. 

With normal workers comp policies you have to estimate what you think your annual payroll will be and then an estimated premium is calculated.  From that, you normally have to put 25% down and then make monthly or quarterly estimated payments based on your estimated annual payroll.  With XactPAY, you pay your workers’ compensation premiums based on your actual payroll – one payroll period at a time.  This eliminates down payments and monthly/quarterly estimated payments.  The process is seamlessly integrated with our payroll system.  

In my opinion, there will always be constant changes in regards to your payroll figures and estimating what your annual payroll is going to be is extremely hard.  Removing the guesswork and calculating workers comp premiums with every payroll is incredibly valuable and will eliminate many of the headaches associated with workers comp. 

Please remember, in most states you are required to obtain workers comp coverage.   If you would like to receive a quote from The Hartford enabling you to use the XactPAY system for your premiums, please contact your Payroll Experts team or request a workers comp quote

Thank you for giving us the opportunity to work with you and your businesses.  We admire you and value our relationships with you.



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