TECHNICAL RESOURCES
ARE YOU READY FOR THE WC AUDIT ?
Confirming payrolls used Written By : Chris Boggs , Big I Virtual University
Workers ' compensation policies are generally based on payroll . At the beginning of the policy term payrolls are estimated ; when the policy expires , payrolls are confirmed via an audit . I ' m sure you already know this , but I needed to provide a basis for this article .
There are two questions surrounding the audit that every agent must be able to answer :
1 . What pay ( remuneration ) is included in the audit ? and 2 . What pay ( remuneration ) is excluded from the audit ?
Following are the answers to both questions .
What Remuneration is INCLUDED in the Audited Payroll ?
• Wages or salaries including retroactive wages or salaries
• Commissions : If the employee is on a draw , and the draw is greater than commissions earned — use the entire amount of the draw ;
• Bonuses , included stock bonus plans - unless the bonus is awarded for individual invention or discovery ;
• Overtime : One-third of amount is subtracted from the total amount ( one-half is subtracted if the employee earned double-time pay );
• Davis-Bacon wages or wages from a similar prevailing wage law ;
• Pay for holidays , vacations , or periods of sickness ;
• Pay for time not worked ( i . e ., paid for an 8-hour day when only 7 hours worked );
• Pay for travel time to or from work or specific job site ;
• Employer payments of amounts otherwise required by law ( i . e ., Statutory insurance , Social Security , etc .);
• Contributions to a savings plan or vacation fund required by a union contract ;
• IRS Qualified Salary Reduction Plan ( i . e . 401K ) ( refers to the employee ' s contribution and any qualified agreement between the employer and the employee to pay into a retirement plan in lieu of direct wages );
• Employee Savings Plans : Only the amount put in by the employee , not the employer ' s match , ( includes contributions to an IRA ) if any ;
• Payment on any basis other than time worked such as piecework , incentive plans or profit sharing plans ;
• Payment or allowance for hand tools or power tools used by hand provided by employees either directly or through a third party and used in their work or operations for the insured ;
• Car allowance ( not a company car , a car allowance );
• The rental value of an apartment or house provided for an employee based on comparable accommodations , along with utilities paid by the employer on behalf of the employee ;
• The value of lodging other than an apartment or house received by employees as part of their pay to the extent shown on the insured ' s records ;
• The value of meals received by employees as part of their pay to the extent shown on the insured ' s record ;
• Substitutes for money such as the value of store certificates , merchandise , credits or any other substitute for money received by employees as part of their pay or in lieu of pay ;
• Expense reimbursements to employees to the extent
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