Home > Case Histories, Field Audits, L&I Penalties, Workmens Compensation > Workers’ Compensaton Audit Policies in Washington State

Workers’ Compensaton Audit Policies in Washington State

 

Audit offices in Washinton State are trying to remain solvent by over zelous application of policies. Latst week, a sole proprietor was considered to be an Unregistered Employer. The unsubstantiated report was not presented in writing, only an accusation by a Compliance Inspector in the field auditors report. The Inspector was quoted as saying the sole proprietor had a person helping at this particular jobsite. The business owner was fined a total of $5,000.

Now, lets try the facts. The business owner talked with the Inspector and told him that the 75-year-old man was his father who did not speak English and was from South America. Also, he told the Inspector what the job was and approximately how long it would take: replacing some roofs over mail box locations in an apartment complex. The entire job took two weeks for a labor charge of $1,500. This handyman needed no laborer since all the work was done from the back of his machine shop trailer attached to his pickup truck.

The policy of workers’ compensation departments is to visit job sites. The inspectors are to use some common sense in that a 75 year old man would not be working unless he was a realtive. Who would hire such a person at that age?  Because of quotas from that Inspector’s supervisor, he has to conform to the policies.

Now lets look at what policies the field auditor has to follow. Most auditors know handyman sole proprietors have a checking account. They can produce bank statements to that effect. Most of the time, letters from the Workers’ Compensation Department are ignored because they did not know how to react to the Department until it is too late.

The field auditor, by policy, has to Estimate the taxes for Unregistered Employer, Insufficient Records, Misrepresentation, and Record Keeping penaties. The only saving grace was the use of one quarter or three months premiums totaling $1,500 instead of the one year minimum. There is no such thing as a one day audit. That assessed amount just happened to be his labor charge on this job.

An explanation of the assessed penalties per department policy was 200 percent of the assessed premiums or $3,000. Even though this was a first time offender, the law states he could have been assesssed $500 or the 200%. When I was with the Department (until 2008), only the really “bad actor” business owners got the 200% penalty. As for the other penalty for Insufficient Records, he was assessed $250 for  “each offense”. Other companies are assessed $1000 per employee/year.

So, beware of policies you know nothing about, and get educated at our free links. Because after you are audited there is very little anyone can do for you in today’s economy. Come learn the lawful defenses to protect your business thoughout this recession.

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