While payroll is often referred to as the basis for premium, in most states it is actually remuneration and when giving year-end bonuses, it's important to understand what is included and excluded for Workers' Comp premiums. While the specific rules for inclusions and exclusions vary among states, in general, year-end bonuses and cash or cash equivalents such as gift cards are included in remuneration for Workers' Compensation purposes. Some state exceptions are Tennessee that includes bonuses only when paid in lieu of wages and specified as a part of a wage contract, Oregon that excludes bonus pay that is not anticipated under the contract of employment and is paid at the sole discretion of the employer, New Mexico that excludes bonuses paid under a state approved safety program and Texas that excludes safety awards paid in accordance with a written safety plan.
On the other hand, certain gifts or perks for employees are not included in remuneration. These include employer-provided tickets to entertainment events, an airline flight, employer-provided automobiles, and club memberships. Moreover, if a special award is given for a discovery or invention, the value is generally excluded from remuneration.