How Businesses Can Prevent Workers’ Compensation Audits and Mistakes

How Businesses Can Prevent Workers’ Compensation Audits and Mistakes

Common workers’ compensation audit mistakes to look out for.

Although no business owner wants to undergo a workers’ compensation audit, they come if the territory if you run a business and have employees. Unfortunately, not all audits go smoothly, and sometimes your insurer may make mistakes. To help ease through the process, take a look at these common workers’ compensation audit mistakes and how to avoid them.


  • Failing to include deductions

Everything in the payroll is not necessarily subject to the workers’ compensation premium. The allowable exclusions vary among states, but the most common are overtime, double pay, and severance pay.


  • Omitting the necessary paperwork

Once you’ve informed the auditor of the deductions you’ve found, you need to back it up with adequate paperwork. You should have the following ready:

  • Payroll records
  • Payroll tax returns
  • Certificates of insurance
  • Invoices for contracts that show a breakdown of labor and materials


  • Improperly classifying employees

Your business operation determines what your governing class will be, which is the classification code in which the bulk of your employees will fall. Employees such as clerical workers who incur little risk may fall into a different category, but only if they never do other work.

Want another way to protect your workplace? Make sure you have the right insurance! Visit the team at American Premier Insurance, serving Phoenix and neighboring cities in Arizona to get access to the right business insurance for your needs.