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Navigating the Workers' Comp Maze in California: Turning Records into Gold

by FCIS Team | This article was posted on 09 15, 2023 |

Header of a timesheet in bright red

How to Navigate the California Worker's Comp Maze

In a land where timecards are the holy grail, the California Labor Code and The Workers Compensation Insurance Rating Bureau play referee and demand employers maintain these vital documents for their hourly workforce. Neglecting this duty isn't just a mere oopsie; it's a one-way ticket to higher workers' comp rates if you are in an industry subject to split wage classifications. Without the right records, audits turn into these epic quests fraught with misclassifications, vanishing overtime records, and missing double-time entries. It's like trying to read a treasure map with half the directions missing.

Unearthing the Audit Adventure

Workers' compensation audits might not sound exciting, but they're what decide your insurance rates. Think of it this way - your payroll data and employee classifications versus the auditors' eagle eyes wield significant influence in this process. The result determines whether your premiums will be flying high or sinking low, all based on your real-time payroll and how you've classified your team.

Framing the Picture with Construction

Now, let's turn our attention to the framing classification within the construction industry. Picture this scenario: You have a skilled carpenter or roofer earning a respectable $45 per hour. However, here's the intriguing part - their workers' compensation rate is directly linked to their hourly wage. If you maintain accurate records, your compensation rate will accurately mirror the risks associated with these roles of highly skilled and better-compensated labor. This, in turn, can lead to lower insurance costs, ultimately benefiting your bottom line.

But, if your records are messier than a sandcastle in a storm, and you can't tell a journeyman from an apprentice, well, things start to get shaky. If an auditor catches something that doesn’t match up, they will apply a test by dividing the employees’ hours by wages they earned. But if the records do not exist, there can be a bigger and more costly problem! To complicate things further, the workers' compensation insurer follows a guideline that obliges them to assign unaccounted payroll to the higher-rated of the two codes when timecard backup cannot be provided. This higher-rated code corresponds to a lower threshold, resulting in a higher rate that one would need to pay.

Compliance is the Key

  • Mastery of Employee Classification: Ensure laser-like precision in your employee classifications.
  • Chronicles of Records: Script detailed records of hours worked, wages earned, and what everyone's up to. Timecards, as mandated by the California Labor Code, are your winning ticket here (also something that is required if you ever get called before the labor board) without these documents, you lose automatically.
  • Time Travel Documentation: When your crew (roofers, carpenters etc.) journey through overtime and double time, make sure their escapades are documented. This isn't a guess; every hour matters.
  • Audit Quests: Embark on internal audits as if they're grand adventures. Seek out discrepancies and tackle them like the fearless leader you are.
  • Apprenticeship of Education: Teach your workforce the importance of accurate timekeeping and why it's crucial to know their roles. As a helpful reminder, this is also an ideal moment to emphasize the necessity of taking mandatory breaks and meal periods. Wage and Hour violations are not fun!
  • Oracle Communication: Keep the lines open with your insurance oracle, sharing any changes that might impact your premiums.


In the epic saga that is California's Construction Industry, Food Service, Healthcare, and Manufacturing, workers' compensation audits are not merely secondary tasks; they are vital. Precise records are not just documents; they shield against complications and unforeseen challenges. Proper classification, like a captivating chapter, shows how meticulous record-keeping can make or break your comp rates.

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We have said it before, and we will say it again, partner with professionals who've mastered the art of workers' comp audits. Tap into their expertise as your secret passageway for achieving compliance. The Fiscus Commercial Insurance suite of solutions includes an exclusive offer for all of our clients: a complimentary 12-month subscription to the Hourly Payroll Service! What are we offering and why do you want it? Hourly offers workers’ compensation insurance and full-service payroll for small and medium businesses with hourly workers. By seamlessly connecting both, Hourly makes sure paying your team is as quick as pressing a button and you never overpay for your workers’ comp premiums.

If you are not already working with us, what are you waiting for?  Contact us today.