New Audit Threshold for 2015: $13,000 in Premium
We recently received the October Newsletter “CoreMark Report” from CoreMark Insurance, our endorsed insurance agent and thought that our employer members would be interested in this story. Starting Jan. 1, 2015, all policies with more than $13,000 in annual premium will be subject to yearly payroll audits.
The Workers’ Compensation Rating – The WCIRB or Bureau made the change from the current level of $10,000 in annual premium – a threshold that’s been in place since 2007, and it means that fewer employers are likely to be audited next year. However, all roofing companies will be audited annually and construction firms with employees in high-wage classifications in the state’s dual-wage system will be subject to audits every three years.
Premium Audits Explained – Your insurer will review your records and operations to gauge if the premium it charged at the start of the policy period was correct. It does this by checking employee numbers, hours worked and if you have put your employees in the proper workers’ comp classification. It then compares that information with what you reported when the policy was written for the year. An audit is usually performed shortly after your policy expiration, but the insurer can also perform it earlier.
What to Do – It is important to keep detailed payroll records. It is even more significant if you wish to divide your wages between classification codes. This is often referred to as “payroll segregation.” If you have an employee who does more than one type of work during the day, you must detail that information.
In general, if an employee divides time between two or more activities that are separately classified, you can divide the employee’s wages if you maintain detailed payroll records documenting the number of hours they spend in each separately classified activity.
These records may include time cards or a daily log that tracks employee hours by activity or classification code.
If you do not maintain detailed time records, then you must assign the employee’s entire gross earnings to the highest-rated classification to which they are exposed.
Please note that for some industries and classifications, including Clerical Office (8810) and Outside Sales (8742), payroll segregation is not allowed.
If you are expanding your business or you are with another workers’ comp insurance company, we suggest that you call our broker, Coremark Ins. and ask for Dan to get a quote and how to get into the CCTA SCIF Group 919.