Telephonic Payroll Audits Legitimate For Smaller Employers
Payroll audits, also known as premium audits can take many forms. Telephonic payroll audits have gained in popularity for smaller employers.
There are different audit types such as:
- Telephonic- yes they are legitimate but read on for more info
- Hybrid
- Physical
- Mail-in (Voluntary)
- Estimated
Telephonic payroll audits are usually for very small employers. Many states have a minimum premium threshold which requires an in-person audit for establishing the proper premium.
Each state has its own specific rules on the minimum premium that would require a physical audit. For instance, as the reader is from California – the minimum rule from the WCIRB for payroll audits: (The 13,000 minimum premium was just changed from 10,000). This is a great example of the rules for most states.
Section VI
4. Audit of Payroll The audit and assignment of payroll shall be governed by the rules and classifications contained herein and the approved pure premium rates, subject to the following specific requirements:
a. The insurer shall audit the employer’s records for the purpose of determining the payroll in accordance with the
following (See Part 1, Section II, General Definitions, for the definition of “Physical Audit” and “Voluntary Audit” and Part 4, Section II, Definitions, for the definition of “Final Premium(s)”):
(1) Each policy producing a final premium of $13,000 or more shall be subject to a physical audit at least once a year. On policies subject to monthly, quarterly, or semiannual interim audits, voluntary audits may be accepted in lieu of interim physical audits. The last audit of the policy shall be a physical audit of the complete policy period.
(2) Each policy producing a final premium of less than $13,000 shall be physically audited at sufficient intervals to ensure determination of proper payrolls. For each policy that is not physically audited, a voluntary audit shall be performed.
(3) Each policy producing a final premium of less than $13,000 and developing exposure in a dual wage construction or erection classification that requires the regular hourly wage to equal or exceed a specified amount shall be physically audited, unless the policy is a renewal and the insurer physically audited one of the two immediately preceding policy periods.
(4) Notwithstanding the above, a physical audit shall be conducted on the complete policy period of each policy insuring the holder of a C-39 license from the Contractors State License Board. See California Insurance Code Section 11665(a) for additional requirements regarding the audit of C-39 license holders.
(5) In every instance, the audit report shall show the source or sources from which the payrolls were obtained. b. If a policy is not audited as required by this Rule, the insurer shall comply with the rules for reporting unaudited exposure on unit statistical reports found in Part 4, Section III, Rule 5, Estimated Audit Code, and Section IV, Rule 4, Exposure Amount, of this Plan.
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