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Payroll Audits Cover More Than Just Wages For Workers Compensation

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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.

Close up picture of Payroll Audits Cover money
Wikimedia Commons – Pen Waggener

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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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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