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Workers’ Comp Audit Mistakes: What to Look For

No company owner wants to undergo a workers’ compensation audit, but they are a fact of life if you run a business and have employees.

Unfortunately, many audits don’t go smoothly and sometimes your insurer may make mistakes. Missouri-based Workers’ Compensation Consultants, which helps employers through the workers’ comp audit process, recently listed the 10 most common audit mistakes that insurance companies make.

The list highlights a common problem and how you can detect the mistakes to avoid being stuck with a massive audit bill. Insurance companies allow you to review the audit with your broker. If you notice that you have received an audit bill that is obviously overstated, you should contact us.

Here are the things to look for when reviewing an audit by your insurance company:

Wrong class code – Misapplication of job classifications occurs in many workers’ comp audits. With hundreds of job classes to choose from, mistakes can happen. Talk to us and review your old policies to see if any of your class codes have changed.

X-Mod is changed – After your insurer finishes the audit, it will use the information to calculate your premium. When that happens, it has to include your X-Mod to get the right rate. But sometimes the insurer may use an incorrect X-Mod. Check carefully.

Subcontractors are counted – Sometimes insurers will include subcontractors as employees, which results in a new audit bill to account for the additional “employees.” But if they are genuine subcontractors, they should not be counted. Often, uninsured contractors will be included as employees. Make sure to use insured contractors only.

Disappearing credits – Most policies will have some sort of premium credits or other modifiers. Sometimes during audits, the insurer will remove them when recalculating the premium they think you owe. Watch out for missing credits and other modifiers if you get an audit bill, like:

  • Premium discount
  • Schedule credits
  • Deductible credits
  • State-specific credits

Audit worksheets missing – If the auditor fails to provide you with audit worksheets, which are used do compile your payroll and other audit information, you should ask to check their work. They will provide you with the information you need to carry out such a check.

Your rates changed – The rates you are charged at the beginning of your policy period must remain the same for the entire policy period. If your base rates have changed, the insurer may have made a mistake.

Separation of payroll – Depending on your industry, you may or may not be able to split your employees’ payroll between job classifications (like cabinet installers and sheetrock hangers). This is a pinch point when errors can occur. If the auditor says you are not allowed to split job classifications even though you have in the past, your audit may be in error.

Unexpected large premium due – If you get a significant bill for your insurance company after your audit, the auditor may have made mistakes, particularly if you know that your employment has remained relatively stable and you’ve had no significant claims, if any. If it seems out of whack, call us.

Payroll data doesn’t match – If there is a discrepancy between your payroll data and what you see on the audit, a mistake may have been made. Try to match the payroll on the audit with that generated from your accountant. If the insurer made a mistake, you could end up paying for phantom payroll numbers.

No physical audit – There are three types of audits:

  • Mail audit
  • Phone audit, and
  • Physical audit

The mail and phone audits are prone to errors since neither you nor your staff likely have any experience in premium auditing. If you have a big bill after a mail or phone audit, mistakes could have been made.


Protecting Your Workers in the Rain

Employees working in the rain face specific hazards, such as poor visibility and wet, slippery surfaces.

When it’s wet and windy, potential hazards at a worksite can be exacerbated. Working in the rain can cause slippery surfaces and limited visibility. It’s also riskier to use heavy equipment in the rain, particularly when moving heavy loads, putting workers on the ground – and even the public – in danger.

However, steps can be taken to mitigate such hazards.

It’s imperative that you as an employer ensure your employees’ safety, especially during this heavy year for rain. When working in the rain, train your employees to:

  • Move cautiously – While workers may be tempted to move fast in the rain to avoid getting wet, this can be dangerous, especially on slippery surfaces. If anything, they should work more slowly and deliberately in all of their tasks.
  • Use the correct equipment – If workers must use electrical tools or equipment, they need to check that they are specifically rated for outdoors. Also, the tools should have textured, no-slip grips and handles.
  • Don proper footwear – Workers should wear footwear with heavy treads that can reduce the chances of slipping.
  • Remember rain gear – Proper rain gear includes rain pants and a raincoat. The best clothing is ventilated to help your workers stay comfortable. If it’s cold and rainy, they should also wear wool or synthetic materials that can stay warm even when wet.
  • Wear non-slip gloves – Workers should wear gloves that provide a sticky grip even when wet. Gloves should be snug and long enough for a jacket sleeve to prevent water from entering.
  • Keep vision clear – Workers who wear glasses (if they must wear goggles for certain jobs) should apply anti-fog spray to them. It’s also advisable to wear a hat to keep rain from their eyes. They shouldn’t use headgear that narrows their field of vision.
  • Work in proper lighting – When working at night, workers should make sure lighting is adequate and the lights used are rated for outdoor use.
  • Ensure visibility – When it’s raining, visibility decreases and it’s easy for motorists and machine operators to have trouble seeing properly. Workers should wear high-visibility clothing, especially in areas with vehicle traffic and heavy machinery. Don’t wear rain gear or vests that have become dull or are no longer reflective.

Cold stress

When it rains, it’s often cold, too – and wet clothing can exacerbate the cold.

Employees working outdoors for prolonged periods of time when it’s cold must be protected from cold stress. Cold stress can cause frostbite, hypothermia and trench foot.

OSHA advises that cold stress is not limited to freezing temperatures, but can occur in outdoor temperatures in the 50-degree Fahrenheit range when rain and wind are present.

OSHA requires addressing this hazard by using protective clothing, in particular the use of layers with an outer material that protects against wind and rain. Although OSHA generally requires employers to pay for their workers’ protective equipment, employers are not required to pay for ordinary clothing such as raincoats.

Heavy-work dangers

Rain makes operating cranes, derricks and hoists more dangerous as well, particularly when moving large and heavy objects. Heavy rain combined with wind speed can make loads difficult to control.

Also, if a rainstorm is accompanied by lightning, equipment such as a crane can become a lightning rod.

If you feel you cannot adequately protect your workers during a storm, you should not conduct operations in the rain.


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