Our office receives calls from clients asking about their workers comp audit. Accurate reporting of payroll is critical to preparing for your audit. However, there can be some grey areas in the audit process. One area that is not always clear is the value of a “gift”. The distinction hinges on whether a present is truly a gift or is being given in lieu of salary that would otherwise be owed to the employee. If the present is truly a gift, it does not have to be reported.
Items that do go into payroll calculations for determining premium include:
- Gross wages or salaries
- Commissions and all bonuses
- Holiday, vacation or sick pay
- The straight time portion of any overtime, but not the overtime portion
- Automobile allowances
- Amounts paid to sub contractors or contract employees or temp workers that do not carry their own worker’s comp coverage
Items that are EXCLUDED from the audit include: Value of a car furnished to an employee, Tips, Severance Pay, Stock Options, Employer Contributions to Retirement, Insurance and/or Stock Plans.
If an employer fails to keep complete and accurate records of remuneration, the total remuneration earned can be assigned to the highest rated classification describing any part of the work! Also, failing to maintain an accurate payroll report can constitute workers’ comp fraud.
*This is intended for informational purposes only and is not to be construed as legal advice.