Laundry Owners Mutual

Introduction to the Payroll Audit

The premium charged for a workers' compensation insurance policy is based upon estimated payrolls.  As such it is necessary to confirm what the actual payroll figures were during the policy term in question and this is accomplished through a payroll audit. 

A payroll audit is the review of various company financial records to assist in determining what the actual gross payrolls were for a specific period of time.  The determined gross payroll is then reported to the carrier and it is used to calculate the final price for the policy period in question.

Audits are performed after the expiration or cancellation of a workers compensation policy, or possibly at specified intervals.  A payroll auditor will contact you, by phone or mail, to schedule the payroll audit appointment.  Occasionally we may be able to conduct the audit by mail or by telephone rather than by an on-site appointment.

If the estimated payrolls used to initially calculate your premium is less than what the actual audited payroll figures were, you will be billed for an additional premium.  Conversely if the estimated payrolls are higher than what the actual audited payroll figures are, then you will be due a return premium.  Depending upon the status of your current policy this return premium will be credited to your current policy or paid by a return premium check. 

The auditor will be reviewing records that contain information necessary to verify the exposures, such as:

So that the auditor can better understand that nature of your business, the auditor will inquire about your overall operations, employee job functions, company and ownership structure.  The auditor may also request a tour of your facility to ensure the proper classification of employees. 

Please be assured that every effort will be made to minimize the time involved by you and your employees.