11 Common mistakes to avoid
1. Forgetting the quarterly UC reports – Unemployment quarterly forms must be available for the auditor or provided for the mail audit, they are a very important part of the process. Page 1 of the 941 form that includes line 5C satisfies this requirement.
2. Not having overtime summarized by employee, job, and state worked – because only the straight time portion of the overtime is included for the audit. Having the overtime detail available allows the auditor to calculate the proper credit.
3. Not listing officers who are named in corporate charter or articles of organization – what they do, where they work so that officers are properly classified. Each state has special rules for how to treat officers so this information is important.
4. Splitting clerical or sales earnings with other codes – Don’t Do it! Code 8810 and 8742 are standard exceptions and in most states cannot be used with any other code for a single employee.
5. Not showing clerical, drivers, salespeople separately – can prevent the auditor from properly classifying these employees and cost policyholder money.
6. Using quarterly wages rather than exact policy period – could result in incorrect total wages, so if your system allows providing the exact wages that is always better-unless of course your policy period is quarters! It’s acceptable to use quarterly wages if you policy begins within 2 weeks of a quarter start date otherwise it is really best to use the exact policy period if possible.
7. Conducting the audit too late – more than 90 days after policy expiration is really late, the earlier you can provide the information the more accurate your data will be in the rating system.
8. Not defining the employee’s job duties – this is important, make sure you describe exactly what an employee does and where – for example an inventory clerk may always be in an office of may work in a warehouse – the difference affects the employee classification.
9. Not splitting payrolls for employees who qualify for multiple classifications – can cost extra premiums, the auditor can assist with each state rules for properly splitting employee payrolls.
10. Misclassifying employees – is a potential pitfall to avoid. The experience modification is based on accurate employee classifications, which can affect premiums that in turn affect expected value of losses and experience modification. An accurate experience modification is important to a long term stable premium development so make sure the employees are classified correctly.
11. Showing Net payrolls – audits always start with Gross wages, it is essential gross wages be available. If you provide net payrolls it can be much more difficult to get the correct final exposure – and an error can cost you money.