Workers’ Compensation Audit Tips & Tricks

For anyone who has had a workers’ compensation policy, you are familiar with the dreaded audit that comes after every policy period.  I want to just briefly share a few ways to save premium dollars on your audit and avoiding paying any more than you have to:

  1. PAYROLL SEPERATION – If your policy has more than one classification code, payroll must be shown separately for each classification to take advantage of lower rated classifications. If not, all payroll may be assigned to the highest rated classification.
  2. EMPLOYEE TIPS – In certain states, tips declared by employees may be excluded from their gross payroll only if separately identified.
  3. OVERTIME PAY – In certain states, you can deduct the premium portion of overtime pay from the gross pay in calculating payroll. For example, if an employee is paid a regular rate of $10.00 per hour and receives time-and-a-half for overtime, the employee’s pay rate is $15.00 for each overtime hour. The $5.00 for each overtime hour can be deducted from your gross payroll only if it is shown separately on your records. You must show overtime separately for each classification.
  4. CERTIFICATES OF INSURANCE – Have certificates available for the audit (at your premises or your accountant’s) to ensure that you aren’t billed for an extra premium unnecessarily. Certificates must cover the period when the subcontractor worked for you (this may require Certificates covering two different policy terms for the subcontractor in some cases). Also, the subcontractor must carry the same liability limits as your policy. For example – if you carry general liability limits of $ 1,000,000 per occurrence & $2,000,000 per aggregate your subcontractor will need those same amounts of liability coverage. If the subcontractor has employees, they must also carry the statutory limits for workers compensation coverage.

Hope these suggestions help.

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HR Moment: Acknowledging Employees

With the struggles we’re currently having in the economy, acknowledging employees for their hard work and contribution is often lost in the many projects that you have going on as an owner in a business. 

However, acknowledging employees’ hard work is even more critical now because they may not be seeing the fruits of their efforts through increased pay, additional benefits or any other standard monetary recognition.

There are ways to acknowledge your employees that will foster loyalty and commitment to your business.  Generally an employee that feels “informed, motivated, and inspired” are much happier, and they are willing to go the extra mile for you. 

This article from Human Resource News mentions 10 ways that you can recognize your employees for their hard work without a monetary reward.

Here are a few of my favorites form the article:

  • Go Beyond Open Door: Keep employees informed to the health of the business. Having information about how the organization is doing, future initiatives helps keep everyone clear on the vision of the business. Having regular meetings is okay, yet make it part of your culture to talk about how employees fit into the success of the company and why.
  • Align visions: Amazing to think that most issues are caused by miscommunication. Share feedback often and regularly to keep a focused approach. Easy to get caught up in the chaos of a million projects yet the big picture vision should always be clear.
  • Giggle, laugh a little: Mix in some fun. Share a distraction for 30 seconds by watching a funny cat video or watching a little Jim Gaffigan. Whatever it is the break and quick laugh will bring down blood pressures and lighten the air.
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Thankfully Insurance Covers Stupidty (Most of the Time) Pt. 6

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Restaurant News: California Food Handler Card Changes

I wanted to just pass this information on directly from the California Restaurant Association:

The California Food Handler Card law went into effect Jan. 1, with a compliance deadline of July 1 for food handlers involved in the preparation, service or storage of food to obtain basic food safety training, pass an exam and secure a California Food Handler Card.

The California Restaurant Association has been closely working with regulators to ensure the new law – which is the biggest public policy change regarding food safety in nearly two decades – will be enforced uniformly across the state.

At this time, operators need to be aware of three key components:

  • Workers must have a California Food Handler Card on file with employers by July 1.
  • Only three providers are qualified to issue a California Food Handler Card: the National Restaurant Association’s ServSafe Starters program, National Registry and Prometrics.
  • Additional information will be released once the regulatory community has finalized and approved the official guidelines to be referenced by the enforcing agencies. These are expected to be released in early April.

In the meantime, for more information, go online at or

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Coverage Tip: Why is it Important to Know What My Building is Made Out of?

During the insurance application process, your insurance agent will typically ask you what type of construction the building you own or lease is made out of.   If you own your building, you will typically know the information off the top of your head.  However, if you are leasing this question can be a little more difficult. 

This question is very vital to insuring you properly.   Depending upon the type of construction of your building, the rates can vary up to 50 percent of the base rate.   Also, answering this question incorrectly can cause you some significant headaches in the event of a claim, and could potentially result in the insurance carrier denying a claim.

To help out, I want to provide a brief summary of the various construction types along with a short description of each.  This way when the question comes from your agent, you will know how to properly answer it.

  1. Frame: Buildings with exterior walls, floors, and roof of combustible construction (i.e. wood).
  2. Ordinary, Joisted or Brick Joisted (Joisted Masonry): Building with exterior walls of brick, concrete, concrete block or stone.  The roof, floors, and their supporting joists, beams, and columns are combustible wood construction.
  3. All Steel or Preengineered:  Both the roof and walls are constructed of light gage steel or aluminum sheet metal. 
  4. Masonry Noncombustible: Buildings that have walls made of masonry materials such as brick, hollow concrete block or concrete.  The floors and roof, including their supports are entirely noncombustible.
  5. Fire Resistive: Buildings designed to withstand the damaging effects of an interior fire for a specified period of time, typically 2 hours.

The construction types listed above start from the most expensive (frame) and go down to the least expensive (fire resistive).  Finding out the construction of the exterior building is typically pretty easy; however, if you’re a tenant it may take some research or help from your landlord to find out what the interior wall and roof construction is of the building. 

When your agent is forced to guess, we will typically place your building in the frame class code.  This means you will pay more premium, but it is the only way we can guarantee that a claim will be paid in the event of a fire when the construction type isn’t known.

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