The 2008 Workers Compensation premium audit is soon.

My desire for you concerning the audit is that you are victorious, not vanquished!

The overall goal, (victory), in this case is that you are charged only the audit premium that you may actually owe. It’s a fact that you would owe zero audit premium if your policy was estimated properly at the start of your policy year, (and there were no changes in payroll, class code or operations in the year).

 

However, for most businesses, some factors will change: you will hire someone, or you might have changed the job duties for some of your employees. Changes of this nature usually result in additional premium.

One of the first things you can do to improve your results is to create a team. This could consist of your CPA, (if they prepare your payroll reports/records), your Human Resources manager, or any appropriate person who has been managing the Work comp payroll and premium throughout the year.

 

 

 

 

 

 

Get complete contact information from the auditor. This way, if a question arises after he or she has left your business, you can reach them to provide answers they need, or get answers to questions you have.

Once you have a team, (or an appropriate person has been given this task), gather your State and Federal quarterly tax forms because those are the primary reports the auditor will need. Probably the most important factor here is to make certain that you align each employee payroll to his/her proper Workers Compensation Class code.

 

If you have overtime payroll, make sure it’s evident, (so that you receive the overtime credit).

Make sure that you point out all persons on payroll who are actually owners of the company, (because they are most likely excluded from coverage), and this payroll should not count. The auditor will most likely have a policy copy which will indicate who is an owner, and who is not.

 

If you are a contractor, make sure to have all the certificates from your sub-contractors on hand. The auditor has full, legal power, (from the California Workers Compensation system), to charge the labor costs of jobs you paid via a 1099 to a sub, unless you provide a valid Workers Compensation certificate from that sub.

 

These are basic steps to navigate you towards a successful audit. If you have an active agent/broker, he or she should be able provide some assistance and guidance to help you prepare. Comment on your audit stories and successes. Best wishes for agreeable auditors.

 

Cheers, your work comp wonk.