Anyone who has had a workers’ compensation policy is familiar with the dreaded audit that comes after every policy period. 

I want to just briefly share a few ways to save premium dollars on your audit and avoid paying any more than you have to:

• PAYROLL SEPERATION – If your policy has more than one classification code, payroll must be shown separately for each classification to take advantage of lower-rated classifications. If not, all payroll may be assigned to the highest-rated classification.

• OVERTIME PAY – In certain states, you can deduct the premium portion of overtime pay from the gross pay in calculating payroll. For example, if an employee is paid a regular rate of $10.00 per hour and receives time-and-a-half for overtime, the employee’s pay rate is $15.00 for each overtime hour. The $5.00 for each overtime hour can be deducted from your gross payroll only if shown separately on your records, and you must show overtime separately for each classification.

• PAYROLL CAPS – For the state of Nevada, you can cap an employee’s payroll at $36,000. This is important because if you plan and estimate each employee’s payroll with the cap, you can avoid overpaying on your insurance. 

• CERTIFICATES OF INSURANCE – Have certificates available for the audit (at your premises or your accountant’s) to ensure that you aren’t billed for an extra premium unnecessarily. Certificates must cover the period when the subcontractor worked for you (this may require Certificates covering two different policy terms for the subcontractor in some cases). Also, the subcontractor must carry the same liability limits as your policy. For example – if you take general liability limits of $ 1,000,000 per occurrence & $2,000,000 per aggregate, your subcontractor will need those exact amounts of liability coverage. If the subcontractor has employees, they must also carry the statutory limits for worker’s compensation coverage.

I hope these suggestions help.