Posts Tagged ' payroll audit'

We are pleased to present below all posts tagged with ' payroll audit'. If you still can't find what you are looking for, try using the search box.

Could You Be Paying for Someone Else’s Mistakes?

Written by on 3/6/2018 5:07 AM in , , , . It has 0 Comments.

For over 20 years, the Minnesota Workers Compensation Insurance Association (MWCIA) has conducted an annual test audit review, pulling from a sample of employers across the state. Designed to verify the accuracy of the statistics reported to the MWCIA, the test audit program reviews the work of auditors working for or on behalf of insurance carriers.

The result has been an increasing trend in the number of errors or, audits that are flat-out wrong. The latest test audit, released January 25 of this year, reported 67.2% of audits conducted in 2017 had errors. Most errors work in favor of the industry, often resulting in an inflated experience mod and higher cost of work comp insurance for the employer.


After a few uneventful years, incorrect audits in 2015 to an astounding 77.8%. Roughly 4 out of 5 audits were wrong. Incorrect audits held near 70% for 2017.

Audit errors occur for many reasons, but the main reason with a lot of employers is the right questions are not being asked, or the employer does not know the rules.

Why Isn’t More Being Done to Ensure Accuracy?

The MWCIA conducts the test audit, but think of it more as a clearing house: whatever the carrier submits, right or wrong, is what the MWCIA uses to calculate your mod, and consequently, what you pay for insurance.

The insurance carrier is not responsible for checking for these errors, and most brokers simply do not have the time, training, or resources to dedicate to reviewing audits. There is also little incentive for brokers to spend time on audit errors.

Employers are not helpless, however. You can get your mod corrected you just have to know where to look. Review your experience mod and audit worksheet for these common errors:

Look for 000s
When have you ever had a year where your payroll was a flat amount? If you notice 000s for payroll in your summary sheet, then it’s wrong.

Look at What Counts as Payroll
Employers may not know what should be included as payroll and auditors typically do not ask. In the state of Minnesota, there are exceptions, also known as “excluded remuneration.” If you include these exceptions in your payroll count, you’re inflating you own mod and paying more for it.

Look for Incorrect Class Codes
The state rates each class of employee based on their level of risk. A clerical worker who sits at a desk all day is at lower risk for a workplace injury than a factory worker on the plant floor. If your employees are coded incorrectly, it could mean you are paying more for exposures that do not exist.