Payroll Audits Cover A Long List of Remuneration
The payroll audits cover of WC policy. One of the most trying times for a CFO or business owner in the Workers Compensation process is the payroll audit. I had a question posed to me yesterday as to what funds are considered gross wages under a Workers Comp policy. That was a good question.
I decided to list the usual payroll items that are counted during a payroll audit. Each state has its own list of items to be considered payroll. The following is a default list of the most common gross payroll items. Please note there are many exceptions to the list.
This is not an exhaustive list – more of an example.
- Wages
- Vacation Pay
- Sick Pay – not paid by a TPA
- Bonuses
- Holiday Pay
- Employee contributions to a 401(k) or other deferred compensation plan
- Employee contributions to a Section 125 Cafeteria Plan
- Auto Allowances
- Market value of lodging provided, i.e. free or reduced rent apartment
- Value of free meals provided by the employer
- Travel or “Show Up” pay
- State Prevailing Wage fringe Benefits paid directly to an employee
- Davis Bacon Wage fringe Benefits paid directly to an employee
- Commissions
- Payments for hand tools provided by the employee, either directly or through a third party
I know of some very strange items being counted as gross payroll. I have seen chickens and pigs being counted in certain situations. The Davis Bacon Wages come from an act established to pay workers a minimum amount on Federal and State contracts. I will cover Davis Bacon Wages in the next post.
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