How To Survive a Workers’ Compensation Audit

Posted on Wednesday, April 17, 2019

It goes without saying, Workers' Compensation audits can be stressful for business owners. At a minimum, they do usually represent several hours spent working on things which don't directly generate revenue. But this type of examination can also represent a significant opportunity: It is quite possible you will be able to reduce your insurance premiums. If you are successful, that's risk-free, interest-free cash flow right back into your business - possibly for a long time to come.

Plan ahead. Try to eliminate the usual daily distractions of running the business - at least while the auditor is there. Empower your middle managers to make some decisions while you are working with the Workers' Comp auditor.

Gather certificates. This is where having an organized and systematic compliance effort all year long pays off. You should have a binder or digital folder where you store all your workplace safety-related documents, including first-aid certificates, CPR certificates, drivers licensing programs, equipment operator certifications and other similar documents.

You should also have any OSHA-related training certificates handy, such as manager training programs.

Work with subcontractors. Collect certificates of insurance from all of your subcontractors, and have them ready for the audit. If your subcontractors don't have Workers' Compensation insurance you may be held responsible for providing such coverage for these workers. Note: Check the dates on these certificates. They should cover the entire time that contractor has been working with you.

Gather payroll records. You want these to show overtime records as well as days worked. The more hours you can show incident-free the better.

Have job descriptions and classifications handy. Descriptions should match the work duties that workers actually perform. It's not unusual for auditors to spot-check job descriptions on paper against the worker's own description of what he actually does every day. Speak with your agent if you have any concerns or questions about classifying your employees.

Ask the auditor for a copy of the review worksheet, or make a copy yourself on the spot, on your own copy machine. Consider asking your agent to review it, just as another check and balance. Every state has a different system, but generally, Workers' Compensation insurance adjusting works on a point system. If you have made substantial improvements to your workplace's safety culture and injury record, you should eventually begin to see that reflected in workplace safety.

Note: Don't go it alone or try to manage the whole safety effort by yourself. You should involve the entire management team together with your rank and file workers. One of the major components in many Workers' Compensation review and adjustment checklists is the attitude and safety consciousness of the entire management team. Having middle managers take ownership of your compliance record is a great way to get them deeply involved in the process.

Check for overpayments. Did you overpay insurance premiums? You may have a right to recover any overpayments made as a result of the previous three audits.

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Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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