How to Prepare for Workers’ Compensation Audit
Is your company prepared for a workers’ compensation audit? These audits may be performed after each policy period, as an annual review of your records, at the request of your insurance company.
Workers’ compensation audits may be performed by phone, mail, or in-person, and are done to make sure that the payroll and class codes that were quoted, still accurately reflect the reality of your company during the policy period. Audits also ensure that sub-contractors had their own coverage in place, because if not, you may be charged for payments to uninsured contractors on your policy audit. This audit is essentially a verification to determine the final premium to be charged.
Workers’ Compensation Audit Checklist
Are you preparing for a workers’ compensation audit? Plan early by preparing some of most the common reports and documents that you may need for a fast and smooth audit:
Payroll Records
1.Payroll summary.
2.Federal Tax Report (941’s that cover the period).
3.State Unemployment Tax reports, or individual earnings records.
4.All overtime payroll records.
Employee Records
1.Explanation of each employee’s duties.
2.The number of hours, days, and weeks that are worked annually.
Records of Payments and Cash Disbursements.
1.Payments to sub-contractors.
2.Material purchases.
3.Casual labor payments.
Certificates of Insurance
1.For all sub-contractors used during the policy period.
2.For any independent contractors used.
Detailed Description of Your Business Operation
1.Used to justify your workers’ comp classification codes
Workers’ Compensation Audit Tips
Preparing for a workers’ compensation audit can seem daunting, but coming prepared can save you time and effort. Remember to thoroughly review any worksheets that your auditor prepares, and engage them during the process, asking any questions that you may have. Follow the below tips to help your audit go as smoothly as possible for you and the auditor!
1.Separate and summarize any overtime paid to employees by job classification or class code.
2.Be sure that you have current certificates of insurance for all subcontractors that you paid during the policy period. Be sure that each certificate proves the subcontractor had work comp coverage during the time of service to your business.
3.If you’re unable to provide a workers’ comp certificate for each subcontractor you will be charged a premium for any money paid for work.
4.Separate employee payroll by class code! Employee payroll can often be divided over different class codes if they perform multiple job duties. Accurate payroll records should be kept and reflect hours and work performed before a multi-class separation will be applied.
5.Make the Auditors’ job easy by being prepared with complete and accurate records available for review. Be sure that an owner, or a person knowledgeable about the business, is available to meet with the auditor to answer any questions that may arise.
Did you know that two Staples Agency staff members recently received their Master Workers Comp Advisor (MWCA) designations? Be sure that you’re fully prepared for your workers’ compensation audit with MWCA’s, Alyssa Passwaters, and Terrin Mitchell! They will help you review all of the information that you’ll need to provide and let you know what you can expect during your audit!