In the dynamic world of New York construction, **workers’ compensation insurance** is a critical safety net for both employers and employees. An integral part of maintaining this safety net is the **workers’ compensation audit**. Understanding what insurance companies look for during these audits can help contractors navigate the process smoothly, avoiding unnecessary complications and ensuring compliance.
Key Components of a Workers’ Compensation Audit
**Insurance companies** conduct workers’ compensation audits to verify that the premium paid accurately reflects the risk associated with the business operations. During the audit, they will focus on several key areas:
1. **Payroll Records**: One of the most scrutinized elements in a workers’ compensation audit is the payroll records. Auditors will examine payroll to ensure all wages are accurately reported and classified according to job duties. This helps in determining the correct premium.
2. **Employee Classifications**: Proper classification of employees is crucial. Misclassification can lead to incorrect premium charges. Auditors will verify that each worker is classified correctly based on the type of work they perform.
3. **Subcontractor Payments**: Payments to subcontractors are also reviewed. Contractors must ensure that subcontractors have their own workers’ compensation coverage; otherwise, those payments might be included in the contractor’s payroll calculations.
4. **Certificates of Insurance**: Having up-to-date certificates of insurance for subcontractors is vital. These documents prove that subcontractors have their own workers’ compensation insurance, which can prevent their payroll from being included in your audit.
What Is Included as Payroll
Payroll encompasses more than just wages. During an audit, the following are typically included as payroll:
– **Gross Wages**: Total earnings paid to employees before deductions.
– **Bonuses**: Any extra compensation awarded to employees.
– **Commissions**: Earnings based on sales or performance.
– **Overtime Pay**: Usually calculated at the straight time rate for audit purposes.
– **Vacation Pay**: Compensation given to employees during their vacation period.
– **Sick Pay**: Wages paid to employees during periods of illness.
What Isn’t Included as Payroll
Certain items are excluded from payroll during a workers’ compensation audit:
– **Tips and Gratuities**: Money received by employees from customers that are not controlled by the employer.
– **Reimbursed Expenses**: Payments made to employees for work-related expenses such as travel and meals.
– **Severance Pay**: Compensation given to employees upon termination.
– **Group Insurance Premiums**: Employer-paid health insurance premiums are not considered payroll.
– **Third-Party Sick Pay**: Wages paid by a third party to employees during periods of illness.
Payroll Caps for High-Earning Tradespeople
In New York, there are payroll caps for certain tradespeople whose weekly earnings exceed a specific threshold. For tradespeople whose **payroll exceeds (as of 7/1/2024) $1,757.19 per week**, only the first $1,757.19 per week is considered when calculating workers’ compensation premiums. This cap helps to manage insurance costs for high-earning employees, ensuring that premiums are not disproportionately high.
Simplifying the Audit Process with BGES Group
Navigating the intricacies of a workers’ compensation audit can be daunting. However, the **BGES Group** offers comprehensive workers’ compensation programs that simplify the process. By providing tailored solutions and expert guidance, BGES Group ensures that New York contractors can focus on their business operations without worrying about the complexities of insurance audits.
Gary Wallach, a veteran insurance expert at BGES Group, can assist you with obtaining new workers’ compensation insurance and offer personalized support to make the audit process straightforward. Contact Gary Wallach at 914-806-5853 for more information.
By understanding what insurance companies look for during a workers’ compensation audit and working with experts like the BGES Group, New York contractors can achieve compliance, minimize their insurance costs, and ensure their workers are adequately protected.
BGES Group is one of New York, New Jersey, and Connecticut’s Construction Insurance Specialists representing 50+ companies, including all the BEST general & umbrella liability programs. We offer all the coverage needed, including property, builders’ risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability, and group health. Our commitment to you goes beyond the policies we provide. We are always just a call, text, or email away, ready to assist you, even on weekends. We understand the importance of your business and are here to help you navigate any insurance challenges.
BGES Group are Workers’ Compensation Insurance Specialists for Tri-State Business Owners: Unhappy with your rates, company, being canceled, losses causing difficulty getting coverage, in the middle of an audit dispute, misclassified payrolls, or whatever your issue. We can help! We have special programs for Auto Services, Contractors (especially in New York), Limousine Services, Logistics Companies, Manufacturers, Recyclers, and Truckers; we can help ANY tri-state business owner. We are considered “Preferred Agents” for this one program that, if we can get you into, their pricing is excellent, offers long-term coverage stability, and can cover multi-state operations. The program takes the hassle out of doing annual audits, too.
If you want to speak with us, call Gary Wallach at 914-806-5853, click here to email, or visit our website.
Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538
email: bgesgroup@gmail.com
website: http://www.bgesgroup.com
© – Copyright – 2024 – BGES Group