Preparing for a Premium Audit

Provide a complete set of business records to the auditor. For most businesses this includes:

• Payroll records (showing totals and division of payroll by type of work performed);
• Checkbook;
• Cash book (disbursements and receipts);
• General ledger;
• Contracts (construction)
• Tax returns including quarterly payroll taxes
• Original certificates of insurance for covered subcontractors 

For construction-type risks additional records are required including contracts, invoices and workers’ compensation certificates (for subcontractors).

Someone knowledgeable in the operations of your business should be present at the audit to answer questions concerning duties of all employees, and other issues that may arise.

If your policy is eligible for more than one classification, your records must separate your payrolls among each type of work. If payrolls have not been correctly separated, all payrolls may be classified in the highest rated classification .

The extra portion of overtime pay is excluded from premium charges. This additional part of overtime is known as premium pay. So, if one of your workers earns $10 per hour during regular hours, and earns $15 (time and one-half) during overtime hours, the extra $5 will be deleted from the total pay. Your records must be separated properly to show the overtime for each worker, and shown in total for each classification, to receive the credit.

For our construction industry policyholders:

We can apply more than one construction classification for your business, and for each of your workers. To be eligible for the lower-rated classifications you must separate your payrolls between classifications in your payroll records. The separation must be based on actual time worked by each worker. Percentage breakdowns are not permitted. Our auditor will request contracts and invoices to verify your separation.

The Construction Payroll Limitation Law was enacted in 1998. This program applies a maximum weekly payroll limitation for each worker in any of the eligible construction classification codes. Construction work involving one-family or two-family houses is not covered by the Payroll Limitation Law. Please request a copy of our pamphlet “The Construction Employment Payroll Limitation Program” by contacting your nearest NYSIF office. Your auditor can assist you as well.

You are responsible for injury claims brought by employees of uninsured subcontractors. We must charge premiums for this exposure. Obtaining an original certificate of workers’ compensation insurance coverage from your subcontractor, before work is started, is the best way to avoid this cost. Have the certificate on file for review by our auditor.