Home > DOL, Field Audits, payroll, speicalty payroll, workers compensation compliance > Who Pays When HR Does Not Do Provide A Defense?

Who Pays When HR Does Not Do Provide A Defense?

We are not talking about wage claims or injuries. We are talking about the money you pay for premiums and unemployment taxes. We have reduced the fear of being audited by any State or insurance agency. One reason: data entry. IF it is captured accurately, you got no worries.

Most HR folks pass along information. They have not a clue about regulatory compliance or even validated assigned risk classification reporting. It is not what is assigned by the insurance company, but HOW they are used.

For example contractors, have multi-classifications that differ on non-prevailing wage jobs. They do not have a program to handle this data. Wait a minute. HR is responsible for non-employees? Yup! Especially when injured. The way the Department of Labor is auditing 1099s in America, look out!

As for those wonderful statutory audits, HR just let them wander into the payroll department and take what they want with no checks and balances. Who is guarding the hen house? Would not you like a programs or app to validate these audit findings? They are out there. And they can run behind any program to keep everyone in Compliance reporting automatically.

For instance can Johnny work in the shop a couple of hours and then go do field work because someone did not show up for work? No, triggers are built in to make sure Johnny stays put for 8 hours. Tomorrow he can go outside and play.

What about Governing Classifications? What about Reciprocity? Who is going to pay for these compliance errors? More on these topics in other blogs.

 Here is one example: a technical repair company sending folks out to repair computers and copy machines all over America. HR handled an audit for a monopoly State on the left coast. After several months, no one inside the billion dollar company could validate the wrong data sent for the audit. For example, you have an ADP type payroll company, On Assignment, a People Soft type, all passing the buck. We are talking about a six figure assessment. Also, the firm could not validate whether no not they ever reported the 20 salesmen in that State either. Auditors love re-auditing firms and using the Misrepresentation Penalty that allows them to charge ten time the premiums.

In teaching companies Compliance Regulatory reporting, you have to be in this new business. That is why integrated IT programming was invented. We could have helped them clean up this mess, but turf wars started and the external auditor was made the scapegoat.

Now let’s take a look at outside contractors and how they are to be reported in all 50 states by the hour. You read it right: by the hour. Why? DOL! I have seen PEO’s get hammered issuing 1009s. They are going after TPA, too.


Now, we would like to show you how easy all this quarterly reporting can be done. Take a look at our Support Page at http://bit.ly/O7DuTL Today is Tuesday, so we are going to talk about CONC or the Contractor Calculator Module from TIME Integrator.

Here is how you set it up: fill in all the qualifications and business licensees. If one is left blank, don’t hire them. Next check with the State compliance board to find out if he/she is in trouble. Once you get past the basics and still want to hire this contractor, you can legally pay his/hers workers’ compensation AND unemployment insurance taxes using joint checks.

Use the Add Contractor menu to enter all required information about the independent contractor or subcontractor you want to hire. Dependent upon the company being a sole proprietor with no employees, all boxes should be filled in. The Account Number boxes should have several State assigned account numbers in addition to a contractor license number. e. (The asterisks are required fields used throughout the program.) The information you will be asked if audited include the risk classifications for contractors is to verify their Scope of Work and reporting compliance.

Contract start and end dates need to be filled for record keeping compliance. Best estimates are acceptable.

Total Contract Amount is for the entire contract. Most states like Washington and California require that labor be broken out from the Total Contract Amount if the BID or quote has both. If you hire them on an hourly basis, the Labor Rate needs to be entered here.

If the contractor is doing Piecework, then work hours have to be signed for on the Contractor Timesheet for record keeping compliance in addition to the Units such as square feet, lineal feet, or roofing squares.

The Scope of Work can be for any reason such as describing what this contractor will be doing or special instructions. The Sales Tax box is to remind you to get a Resale Certificate from a State revenue or Industrial Relations office as applicable.

Print this data before you submit it for a complete historical record before adding the next contractor. If the contract is modified or completed, edit it in the Contractors report.


Use Add Classification to enter the business risk assigned to your business for independent contractors and subcontractors. To find these numerical codes, rates and descriptions, look at your last workers’ compensation report you filed or call your policy manager in the State you are doing business. You must add the year in front of every classification description for historical data capability.

Record keeping requirements demand you link a classification with a contractor that may have prevailing wage reporting requirements. If you are audited, this information will reduce your assessment of premium taxes and penalties.

After you have entered the basic classification number, enter any sub classification such as -01, and describe the task that contractor is doing from the classification description. Next, enter the premium or tax rate that has been assigned.

After the Classifications are entered in the program, you can edit them from the Classification Report for the employees, contractors, and projects.


The Combine Contractor & Class menu is to create a contractor with a working classification and the current pay rate. This information copies to the Timesheets and Add Contractor Hours menu to make sure there are no data entry errors. Contractors can have more than one classification, too, especially on prevailing wage contracts.

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