What is an workers comp audit?

[tanishia]

I am a California licensed contractor and today i got a paper mailed to me from workers comp company, saying i have to have an audit. I have had 3 people work for me for a short period of time, all of which are licensed but do not have workers compensation. how much will my premium hike up to?

[broehain61]

When you started your Workers Compensation policy you advised the agent what your anticipated payroll would be for the upcoming year. The premium for your WC policy was calculated based on that estimate.

At the end of the policy year the company audits your payroll records. If your actual payroll equaled your estimate of payroll your premium is not affected. If on the other hand you had more payroll than you estimated you will have an additional premium due. If your estimate was higher than your actual payroll you will have a return of premium.

It is always a good idea to try to estimate your payrolls as accurately as you can so that your policy cost is a true reflection of your insurance costs. Your General Liability policy may also be subject to audit.

[oakley]

When you take out a policy, you guess, as to the proper class code for your business, and estimate the payroll for the coming year.

Every single year, as the policy expires, the policy that is expiring, is checked. They will come in and look at your business, and look at your books. They'll want to see tax returns.

At that time, they can do the following:

1. adjust your classification or sic code, or add or subtract class codes as necessary for what you have done during the year
2. adjust the payrolls for each class that you paid
3. add payroll for any uninsured subcontractors you had working for you.

So, there's no way to know how much your premium will go up. We don't know your class code, the proper class code, the rate, or the amount you paid your undeclared employees. But, that increase is retroactive for the past year, AND, those figures will be applied to the renewal policy.

You don't add and subtract employees and subcontractors to your payroll as the year goes on , and you add and subtreact them. The way it works, is ANY employees or uninsured subs, during that time, have coverage, automatically. THEN you get charged for it and the rates get adjusted.

Hope that helps.

[rickie]

~~If they were sub contractors, then you aren't required to carry workers comp on them. If you paid them from payroll, then by law you had to have workers comp insurance while they were employed.

The audit is to look at your payroll records, and then they see if it matches what you told them when you signed up. If you said employees would only be ?? payroll and you ended up paying them ??? then your in trouble. They can make you back pay with fines. They will also raise your rates according to what your payroll really is.

If everything stays in the amount of what you claimed your payroll was or was less, it will be adjusted.

Most the time licensed contractors are just subs. Then you don't have to carry w.c ins. or payroll taxes. You can just 1099 them at the end of the year for the amount of money you paid when you sub-contracted them.

If you have no employees, then you can claim exempt, and you do not have to carry w.c. insurance at all.

Hope this makes sense.~~

[wendlesora]

now you know why companies rather hire you ! they don't want to be bothered!

i worked for the legal and medical in Workers comp call and find out yourself and try to get it ! have some documents so when the audit takes place yo will have proof that you are seeking info on it!

good luck

[lazaro94]

They have a right to see if your doing what your supposed to.