Are Workers' Compensation Payrolls Up-To-Date?
All workers' compensation (WC) policies are required to be audited at policy expiration. The annual premium audit, sometimes known as the payroll audit, determines your business' actual WC insurance premium for the policy period. The audit specifically looks at the business operations, job duties, and responsibilities of all officers, employees, and temporary workers, along with gross wages during the policy term.
It is important to keep WC payrolls up-to-date to lessen the potential financial impact at the time of audit. If your business needs to adjust its payroll at any time during the policy period, or if you have questions about the audit process, please contact your regional account manager or call +1 866 814 7515.
Audit Business Examples
Audit Reveals Incorrect Employee Job Classifications
A contracted service provider business had listed one of its Officers under the “clerical” job classification at the renewal of its workers’ compensation policy.
At audit, it was found that this Officer drove a regular route — meaning this person's classification should have instead been under the basic classification of the business operations, “Trucking: Long-Distance Hauling.” This classification error resulted in an additional $7,800 in premium being due at audit.
TIP: This can be avoided by reporting a change in job classifications when it happens. Doing so may ultimately help your business budget expenses more accurately.
Audit Reveals Understated Payroll And Premium Shortfall
When renewing its workers’ compensation coverage, a contracted service provider business listed driver payroll at $148,000.
At audit, it was found that driver payroll for that business was actually $158,000. By understating payroll by $10,000, the policyholder owed an additional $1,588 in workers’ compensation premium.
TIP: It is important to assess your business’ expected payroll output throughout the year. Keeping in mind your business can anticipate heavier output during peak seasons (i.e. bonuses, additional employees, or more hours worked). If any unforeseen changes occur, contact Marsh as soon as possible to reduce any impact at the time of audit.