Women Career and Education

This is a time of year when many businesspeople and women simply shiver in their boots. Your Worker’s Compensation audit is about to be performed by the insurance company, or worse, the State Fund. Instead of throwing up your hands and sending the auditor to your accountant, you can do it yourself. Why would I commit such a hideous act, you ask?
The answer, simply put, is that you know your business better than anyone else, or at least you should. After 30 years of seeing the results and correcting them of fouled up audits, let me brief you on the most common errors. Errors that if you were present, would never have occurred in the first place.

This should be prefaced by saying that this expertise is based on the New York system of Workers Compensation. But understand that whatever else can be said of New York, it has lead the country in many insurance related areas for decades and is highly regarded nationwide in those respects. That regard has persuaded many states to follow the NY Insurance Departments lead in countless areas. And since this article will speak to general problem areas, your state’s guidelines should be very similar, if not identical.

To start off business people should understand what is being sought. Obviously, payroll, but beyond that an auditor may ask for a general ledger. From the general ledger they will be looking for payments to others that could be construed as payroll. For instance, did you have any repairs done and made payment for them to an individual? If that is the case, you should have a certificate of insurance on file, so that you may exhibit that the repair person was indeed a business and did have their own Workers Comp insurance. If you do not, that payment may be added to your payroll under a class commensurate with the work performed. Unless you do not want to pay, for example, the Workers Comp rate for roof repairs that were performed, get a certificate of insurance from the contractor. If you pay a corporation, this may not be an issue, Workers Comp wise, but you should still get a certificate of insurance from contractors who perform work for you anyway, for your own protection.

Probably the biggest error you will save yourself from over paying for is misclassification of payroll. Check your rates for each type of job your employees perform to be prepared and guide any payroll you can to the lowest rated job. No, do not lie, but there are many gray areas and try to take advantage of them where you can. A clerical employee rate is about $.40 per hundred of payroll. A labor worker, depending on the job will be several times that. You do not want a bookkeeper salary mixed in to the wrong area. If you still have your accountant work with the auditor, make sure they know what job position each person occupies. It can cost you literally thousands of dollars.
Separate your overtime payroll. Be able to identify it clearly and tell the auditor which is which. The extra you pay in overtime should not be charged for, only the straight pay.
While there are many other specific instances in which errors may occur in these typically account for 90%+ of the problems faced in a Worker’s Compensation audit. If you can be aware of these sorts of issues you will face, you can save money on your premiums year after year, whether your accountant handles it, or you do.