When you’ve got jobs lined up and are juggling workers, projects, and worksites, the last thing you want to do is be hit with the mother of all paperwork problems: an audit.

When it comes to California workers compensation policies, though, audits are simply routine. All insurers are required to audit their policy-holders, and that’s a good thing: it allows companies to ensure that their workers’ compensation policies are exactly what they need to protect employees… and themselves.

An audit is nothing to be afraid of—especially if you follow our simple tips below. (And if you keep up with all these suggestions, preparing for an audit won’t even be a big drain on your schedule!)

• Inform your insurer if you hire new employees, employees change tasks, or if operations change.
• Make accuracy a priority. Provide accurate payroll estimates prior to the start of the policy (particularly if it’s the first year of the policy), and report payroll accurately. Be sure to use the correct classifications and check your math.
• Keep your records up to date, easy to access, and—you guessed it—accurate.
• As your audit approaches, gather the following records, which are likely to be requested by the auditor:
  • Names and job duties of employees
  • State Quarterly Wage and Withholding Reports (DE 9 forms)
  • Payroll journals
  • Payroll reports for the coverage period being audited
  • Certificates of insurance for all independent contractors
  • 1099s issued

The following additional records may also be requested by the auditor:

• Payroll registers, time books, time cards, check registers, check stubs, and checkbooks
• Cash disbursement journals, cash books, and petty cash books
• General or subsidiary ledgers, job cost records, bonus ledgers, and commission ledgers
• Profit-sharing reports, prevailing-wage determination sheets, and federal and state tax forms

Remember, an California workers comp audit is simply routine—and it provides you with an opportunity to ensure that your employees and your company are protected, which is something to feel good about when you’re in construction, one of the most hazardous industries.

ContractorHelpers.com is a service of Insurance Partners, Inc., which has been providing quality protection for contractors for more than 35 years. California contractors insurance specialists work with companies on everything from California general liability and California workers compensation insurance to contractor bonds and a “pay as you sell” liability insurance program designed especially for homebuilders. If you have questions about your contractor insurance coverage, contact us.