Red Flags You May be Overpaying Your Workers Comp Payroll Audit

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Your Workers Comp Red Flags Due To Payroll Audit

The red flags on your payroll or premium audit cause employers to email us very often. The following is a short list of what we have seen in client files nationwide when we perform audits for employers.

Payroll Audit Due Was Red Flags Icon
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After the Audit

  • Has your company experienced significant increases in Workers’ Compensation premiums (big audit bill)?
  • Has your company incurred charges for uninsured subcontractors or owner-operators?
  • Has your insurance company included in your payroll any owner-operator expenses?
  • Do your Classification Codes include “all employees” or “not otherwise classified” (NOC)?

Were your Insurance Company’s Workers’ Compensation Audits Conducted:

  • More than 120 days after the Policy Expiration Date?
  • Via telephone?
  • Using 941’s or state unemployment forms?

Did the Workers’ Compensation Auditor:

  • Not leave a copy of their Worksheets?
  • Ask very few questions?
  • Examine very few records?
  • Seem to be brief and superficial?

2019 update –

Did the auditor ask to take all of the records out of your place of business?  Nothing in any of the rating bureau rules or the policy requires that the employer release any information for an offsite review.   The choice remains up to the employer.  The policy and rating bureaus require that your company provide the premium auditor with records for an onsite review.

It is a great idea to set aside time to review your Workers Comp premium/payroll audits and bills upon receipt. Ask questions if there is anything that looks out of place or seems to not quite fit with your Workers Comp policy. As the employer and insured, you have the most leverage before you pay the audit billing. Regardless of red flags or not, do not ignore the audit bill, as there are specific time limits to raising a dispute or paying the bill without penalty or cancellation.

Next Up – Self Insureds

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Related...

James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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