Home > workers compensation compliance > WASHINGTON—a Monopolistic State made up of little kingdoms

WASHINGTON—a Monopolistic State made up of little kingdoms

Attestation Software has analyzed States that monopolize the workers’ compensation and unemployment insurance premium and tax business. What is unique is the recording must be by the hours, not dollars, which drives payroll companies crazy. It shouldn’t. All audits of employees and independent contractors that turn in wage claims against businesses center around the hours and pay rates for both.   http://bit.ly/1e8IdNA

But before we get into Washington, let me remind you that WC, UI, and any Benefit Funds in any state may be unique, but they are all mathematical formulas. Why insurance and payroll companies haven’t figured this out is beyond my pay grade—sort of.  I think is a ‘control’ and revenue issue.

Remember, all States query hours and dollars between the two taxing authorities to find good audit prospects. Small businesses usually calculate UI taxes first, and then go blind when they calculate the WC premiums. For some reason there is a mind blockage by bookkeepers and the other usual suspects. They just don’t get how to USE risk classifications for quarterly reporting.

When we developed our applications, we were surprised to learn quarterly reporting by hours and dollars did not make a difference. But for some reason, the additional classification reporting goes south. That is why the data entry configuration has to be calculated correctly to ensure compliance.

Each State formula is based on hours and rate or type of pay. The tricky part is what is counted. For example, sick leave hours, vacation hours, and bonus dollars in the Labor &Industries (L&) are not counted for workers’ compensation premiums. Employment Security Department (ESD) does not count sick leave hours or dollars, but does count bonus dollars. Go figure.

One more item is all the ‘benefit funds’ that are tacked on. Washington has only one; California has eight. This is where the formulas get interesting but not impossible to calculate accurately. You have to just dig deep to make sure you are using the formulas correctly. Legislative bodies like to change them every year. In Washington, it is called the Employment Administrative Fund historically a $.0002 tax on the net ESD amount. No one knows what dark hole this money goes into. It is supposed to go towards training and rehabilitation.

All Washingtonians: give us a call if we can provide the resources to ensure your IT regulatory compliance reporting. Most are on the web, but that does not help if you are in one of the twenty three special reporting industries.

PS Don’t forget about the Reciprocity States to prevent paying taxes on the same money. There are eight of them and California is not one of them. Send for the list.

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