Work Comp 101

I just finished my work comp audit for the agency–wine’o’clock time, yay!!  Yes, even we have to submit to the paperwork and demands of the carriers.  It was surprisingly painless (considering how many email reminders they had to send me as I procrastinated.)  It was all online, fill in the blank, drag and drop pdf’s, easy peasey!

So why was I doing this in the first place? Work Comp, short for workmans compensation—but that’s waaayyy to many letters–is the policy that protects your workers if they would get injured on the job.  If you have more than $20,000 in payroll, you are required to take this type of policy out, with some limited exceptions.  As always, in order to calculate the premium rate, it has to be based on exposure. Workers work to get paid (at least ours do) so that means payroll is where we start.

When you first take out a work comp policy, we are insuring the future based on the past……wait, wuh??  That’s right, we are taking your payroll as we know it (the past) and plugging that in for your policy (the future) to calculate the rate.  And for some, payroll stays pretty much the same year to year.  But for others, it can change a lot.  We have to make sure that you are paying only for the work comp coverage that you need, no more, no less.  That’s where the audit comes in.  The traditional audit comes in at the end of the policy year.  You have to complete the audit questions, like I just did, and they calculate how close this was to what was submitted at the start of the policy.  If your payroll was less than estimated, you will have a credit back—those are awesome!  If it was more, unfortunately you will get an extra audit premium bill to pay.  But it was really due all along, because the beginning was just a guess based on the past, remember?

In some cases, you might be with a company that offers “pay as you go” work comp.  In this model, you have to submit monthly reports and then your payroll is adjusted accordingly.  This method insures that you are paying the correct amount at the time it is earned/covered.  But you have to be okay with submitting monthly, timely reports.

What happens if you don’t comply with the audit?  Well, I completed my audit today because I received a polite email reminder that if I didn’t finish it, my premiums could go up as much as 300%.  And I would be branded “non-compliant.”  And I would have problems getting work comp coverage anywhere else.  In other words, totally not cool.

If you have any questions about work comp, you are in luck, because we have answers!  Call, email, or text us, we are here to help!  At least until wine’o’clock……