Workers’ Compensation Audits: What Employers Should Expect

A workers’ compensation audit is a routine process that ensures businesses are paying the correct amount of insurance premiums based on their actual payroll and job classifications. Understanding what to expect can help businesses prepare and navigate the audit smoothly.

Key Steps in Audits

When preparing for workers’ compensation audits, your business should consider the following five steps:

1. Get ready. Businesses will receive a notification from their insurance carrier about the upcoming audit. This notice will include details on the audit process, required documents and the scheduled date. It’s crucial to gather all necessary records, such as payroll reports, tax returns and employee job descriptions, to facilitate a smooth audit.

2. Know the type of audit. There are generally three types of workers’ compensation audits: mail, phone and physical. A mail audit involves sending the required documents to the auditor. A phone audit is conducted over a call, where the auditor may ask for additional information. With a physical audit, an auditor visits the business premises to review records in person.

3. Review documentation. During the audit, the auditor will review payroll records, tax documents and employee classifications. They will verify that employees are correctly classified according to their job duties, as misclassification can lead to incorrect premium calculations. Accurate documentation is essential to avoid discrepancies and potential penalties.

4. Analyze findings. After reviewing the documents, the auditor will provide a summary of their findings. This may result in an adjustment to the premium, either an increase or a decrease, based on the actual payroll and job classifications. Businesses should review the audit report carefully and address any discrepancies or questions with the auditor.

5. Adjust finances. If the audit results in additional premiums owed, businesses will receive an invoice for the amount due. Conversely, if there is an overpayment, the insurance carrier may issue a refund or credit. It’s important to address any issues promptly to maintain compliance and avoid future complications.

We’re Here to Help

Contact Guardian Insurance in Lilburn, Georgia, today to learn more about workers’ compensation audits.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.