Following the expiration of your Florida Workers Compensation policy, the carrier will require that you provide them with accurate payroll information from the past year, to compare with projected figures provided prior to the policy period. The carrier may choose to do either a written or in-person audit, however, in either case, similar documentation may be required. We are providing you with tips on how to complete your Workers Compensation audit.
Which Documents Should We Collect?
- Payroll records (employee specific)
- Unemployment tax returns
- Form 1040 Schedule C (if sole proprietor)
- Tax reports (Federal Payroll 940s or 941s)
- General ledger, subcontractor ledgers and journal (or 1099s)
- Workers compensation insurance policy
- Employee information (compiled here)
- Corporate officer information (compiled here)
- Audit package totals (compiled here)
- Subcontractor information (compiled here)
- Certificates of insurance for each subcontractor
- Additional materials upon auditor request
What Employee Information Should We Prepare?
Make note of each employee’s payroll and classification with the exception of exempt corporate officers. Employee’s NCCI class codes generally are defined by the business and not the individual employee, with the exception of some standard classes including clerical and outside sales. Your codes should have been selected prior to the policy period, if there have been changes in operation or you believe that some codes are incorrect, you should review with your agent.
For non-exempt corporate officers, consider the state’s maximum and minimum payrolls (if any), prior to reporting.
Which remuneration figures should be included?
Remuneration is payment or compensation received for services or employment. It includes payroll and any bonuses or other economic benefits that the employee receives.
- Vacation and Holiday Pay
- Bonuses and commissions
- Sick pay
- Employee contributions to a 401k or other deferred compensation plan
- Auto allowances*
- Rental value of a housing provided to employee
- Value of free meals provided by the employer
- Travel or “Show Up” pay
Can We Exclude Any Payroll?
While state rules vary, this is a general list of payroll that may be excluded.
- Increased or excess portion of overtime
- Tips and other gratuities received by employees
- Payments by employer to group insurance plans
- The value of special rewards for individual invention or discovery
- Severance payments, except for time worked or accrued vacation
- Payment for active military duty for reservists called to active duty
- Employee discounts on goods, property, or services purchased from the employer
- Expense reimbursements to employees for legitimate business expenses (requires some record or receipt)
- The value of an employer-provided vehicle (e.g., a car or airplane)
- The value of an incentive vacation (for example, a sales leader might win a vacation)
- The value of a ticket to an entertainment event that is provided by the employer
- Supper money for late work
- Work uniform allowances
If the employer provides time-and-a-half overtime wages, this should be noted on the audit documents and 1/3 of wages will be excluded from premium calculations.
Is My Information Correct?
Confirm the information compiled in previous steps, making sure all areas have been addressed and all figures are correct. Arrange the information gathered by class code, including payroll information, along with any excluded remunerations that apply.
Do We Need To Include Subcontractors?
For any subcontractor hired that does not maintain Workers Compensation, capture only the cost of payroll for the contract, in order to prevent overpayment. Your carrier will require proof of Workers Compensation insurance for each subcontractor that you want to exclude, so be sure to collect certificates throughout the year.
Are You Ready for Your Workers Compensation Audit?
Compile all necessary materials and keep them organized to provide to your auditor upon arrival.
Biscayne Risk & Insurance Group is prepared to help you with all of your Workers Compensation needs. For additional information, please contact us at 561.571.1001 or [email protected].