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