Glossary
Taxes & Insurance
Workers Compensation Insurance
Insurance covering medical costs and lost wages for employees injured on the job, typically covering on-site building staff such as maintenance and security personnel in a CAM context. Overcharges occur when a landlord allocates payroll for corporate or off-site employees, not staff actually working at the property, into a single property's premium.
Firm impact
Workers compensation premiums are calculated on a payroll base, so an inflated headcount allocation inflates the premium the same way an inflated square footage inflates a pro-rata share. Firms should treat the underlying payroll allocation as verifiable, not just the final premium number reported in CAM.
How this gets abused
A landlord's regional maintenance staff serve five properties, but their full workers compensation premium is allocated entirely to the CAM pool of the single property under audit instead of being split across all five properties they actually work at. The tenants in that one building fund coverage for staff who spend most of their time elsewhere.
Practitioner note
Request the payroll allocation schedule behind the workers compensation premium and confirm it's based on hours or staff dedicated to the specific property, not a full corporate or regional headcount applied to one building.
FAQ
Questions about workers compensation insurance
Should workers compensation insurance ever appear in a CAM reconciliation?
Yes, for on-site staff whose work directly serves the property, such as building maintenance or security personnel. The issue is whether the payroll base behind the premium reflects only staff working at that property.
How can a firm verify the payroll allocation behind a workers compensation charge?
Request the insurer's payroll audit or the landlord's payroll allocation worksheet for the property, showing which employees and what share of their compensation the premium is based on.
You know the term. Now check the math.
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