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Audits, Workers’ Comp, and COVID 19

Year-end audits are performed at the end of each policy period. During your company’s audit, your auditor will need assistance from someone at your business who is familiar with the records and duties of each employee. You will need certain documents, such as tax reports, payroll summaries and subcontractor invoices.

Click here for a list of records and information to maintain throughout the year recommended by our partner, Summit Holdings. You will find the list under “Preparing for an audit.”

Audit Preparation During COVID-19

As you probably know by now, you’ll need to keep additional factors on your radar as a result of COVID-19. Some of you may have nonworking or work-from-home employees, or other circumstances that may impact certain aspects of your audit.

Here are some scenarios to be aware of:

Employees working from home due to COVID-19 and performing only clerical duties, regardless of previous job functions. These positions will be classified to Code 8871—Clerical Telecommuter Employees, unless the governing class code includes clerical operations.

Employees who were furloughed during the pandemic but still paid. Based on Class Code 0012—Paid Furloughed Employees, created by The National Council on Compensation Insurance (NCCI), these wages can be excluded from premium calculations. Contact us if you have questions regarding payroll reporting and adding this class code to your policy.

Employees working part-time but earning a full-time salary or getting paid for a full 40-hour work week. Per NCCI, wages may be split between an employee’s normal classification and Code 0012. You’ll need to provide detailed payroll records for this type of wage split at audit, so make sure you’re keeping track of it now.

Employees who are now performing delivery services as a result of COVID-19. These individuals will be classified to Code 7380—Drivers, Chauffeurs, Messengers, which can be added to the policy now or at audit. If employees also perform work that falls outside the scope of Code 7380, you’ll need to provide records detailing a time and wage split so that wages can be allocated accordingly.

Employees forced into quarantine or responsible for taking care of someone who is in quarantine due to COVID-19 and are not able to work from home but are still paid for this time. Please keep detailed documentation indicating the time period the employee was in quarantine. If you are able to provide this information at audit, wages for that time period will be allocated to Code 0012 and not used for calculation of premium.

Employees taking a leave of absence to care for a child whose school is closed, or childcare provider is unavailable due to COVID-19, and unable to work onsite or at home. Please keep detailed records indicating the time period the employee took a leave of absence. If this information is provided at audit, wages paid to the employee for that time period will be allocated to Code 0012 and not used for calculation of premium.

Click here to access more COVID-19 Workers’ Comp class code updates. If you have audit-related questions, please contact us.


The information in this article was obtained from various sources and is not all inclusive regarding the subject matter. This content is offered for educational purposes only. 

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