NY state worker's comp audit

[joanmcq]

Anyone on here have experience in one of these? My client is sending me the notice now, but I thought I'd get a jump on it.

They have one part time employee in NY who hasn't worked any hours this year. They aren't located in NY; it's a small nonprofit and the books are kept in Seattle and it's located in CA.

[kcjenkins]

Even if they only have one NY employee, Not-for-profits that are compensating individuals for their services are required to obtain a workers' compensation insurance policy with the following exceptions:

• Paid clergy and members of religious orders are exempt from mandatory coverage (but can be covered voluntarily). To be exempt the clergy and members of religious orders must be performing only religious duties.
• Members of supervised amateur athletic activities operated on a nonprofit basis, provided that such members are not otherwise engaged or employed by any person, firm, or corporation participating in such athletic activity.
• Paid individuals engaged in a teaching capacity in or for a religious, charitable or educational institution (Section 501©(3) under the IRS tax code) are also exempt from mandatory coverage (but can also be covered voluntarily). To be exempt, the teachers must only be performing teaching duties.
• Paid individuals engaged in a non-manual capacity in or for a religious, charitable or educational institution (Section 501©(3) under the IRS tax code) are also exempt from mandatory coverage (but can also be covered voluntarily). [Manual labor includes but is not limited to such tasks as filing; carrying materials such as pamphlets, binders, or books; cleaning such as dusting or vacuuming; playing musical instruments; moving furniture; shoveling snow; mowing lawns; and construction of any sort.]
• Persons receiving charitable aid from a religious or charitable institution (Section 501©(3) under the IRS tax code) who perform work in return for such aid and who are not under any express contract of hire, and certain persons receiving rehabilitation services in a sheltered workshop.

[joanmcq]

Oh they have workers comp. and now they're being audited. The appointment was set up to take place at the employees home, if you can believe it!

[JohnH]

For most workers comp audits, I get the auditor's email address and email them the relevant info. Then I ask what else they might need. About 80% of the time that closes out the audit. I think the other 20% are either inexperienced or else the W/C provider mandates a site visit. Don't know if that would fly with a NY provider but it's worth a try.

Most of the time, after they get the job description and verification of the payroll amounts through payroll reports, the only other issue is whether the employer is using any independent contractors.

[ILLMAS]

I have done a few in IL, they basically request 941 and SUI/SUTA reports for a given period. From the info they will determine if employees worked less or more from the prior audit, then they either refund the access paid or send the company a bill if under paid, they also take into account subcontractors, so you need to provide 1099s too. Besides providing payroll info, they will ask you questions like this:

- The policy period is 02/20/2012 through 02/20/2013. You may go to the nearest month or quarter end if you prefer, as long as you provide a full 12 months.

- Please provide a brief description of your company’s operations.

RECORDS NEEDED:

- Please provide a list of all employees for the policy period, showing gross pay and overtime pay for each employee.

Note: If you can provide separate amounts for overtime, we can make a deduction for them.

- Please indicate job duties for each employee. For office employees, please indicate specific duties such as “receptionist” or “accounting” rather than just “office”.

- Please indicate which employees are corporate officers.

- Please provide copies of Federal 941 quarterly returns and State UC tax returns for the four quarters of 2012.

[jklcpa]

In addition to all of the above and depending on the type of business, they may also ask to see the tax returns and general ledgers that the audit period covers. If there are any subcontractors, those independents' worker's comp insurance certificates will be requested.

If an employee performs multiple functions that fall in more than one rate classification, the hours and earnings will need to be broken down into these categories. I have a landscaper where the grunts have a variety of functions. Obviously something like site cleanup or weeding/mulching flower beds is a lot less risky than trimming trees with chain saws and work that involves any use of power equipment.

[joanmcq]

Ok, this gives me a much better idea of what's going on. I wonder why they haven't had this issue with CA & WA?

[Guest Taxed]

By any chance is Hartford Insurance the workmen comp. insurance carrier?

I have a Landscapit company as a client and each year I have to send them a copy of the 940 and 941 along with Sch C. Also as jklcpa said they want the hours and actual job functions does by each employee.

Certain industries, misclassify work functions. For example a landscaper may not disclose that an employee climbs and chops down trees AS their main function, but will say that he just rides a mower.

Also in my state the Dept. of Labor has inspectors who will go to job sites and require the owner or manager to show proof of work comp. insurance. They target roofers, landscapers and framers!

[joanmcq]

No, it's the NY State Workers Comp Insurance Program. As I found out getting my own workers comp for a part time seasonal employee, it's not easy to get WC insurance for a really low payroll. At least I found some without having to go through the state system. This is the only employee in NY, part time so much that she hasn't even worked in 2013.

[BulldogTom]

No, it's the NY State Workers Comp Insurance Program. As I found out getting my own workers comp for a part time seasonal employee, it's not easy to get WC insurance for a really low payroll. At least I found some without having to go through the state system. This is the only employee in NY, part time so much that she hasn't even worked in 2013.

Not familiar with NY, so I stayed out of this one. But I have a lot of experience in CA. I have been handling CA w/c audits for the last 15 years. If I can ever be of assistance to you, I would be glad to offer anything I can. Just let me know.

Tom

Hollister, CA

[jklcpa]

Tom, I'm curious to know how a state worker's comp audit differs from an insurance audit by an insurance company.

[BulldogTom]

Typically, speaking only in CA, the State Fund auditors are a bit more picky. They tend to do more employee interviews and site visits to verify the information that we provide them. Private insurers generally hire out an outside audit firm. They tend to be a bit more easy to work with. Less field visits and employee interviews.

This has just been my experience.

BTW - working on my audit papers for my day job company right now. CA and NV payroll. Private insurer.

Tom

Hollister, CA

[DevM]

Anyone on here have experience in one of these? My client is sending me the notice now, but I thought I'd get a jump on it.

They have one part time employee in NY who hasn't worked any hours this year. They aren't located in NY; it's a small nonprofit and the books are kept in Seattle and it's located in CA.

I had one where the State WC audit was performed of a NY Client. Asked the auditor to come to my office in NJ and was completed in my office.

NO payroll was run as there were no employees. His take was that if business was conducted a minimum payroll must be run and was charged SUI / SDI for the qtr.