Are your Profits leaking out through your Worker’s Comp. Premium?

workers comp

One of the four tenants at HR Ledger® is to help small business with Cash Flow.  We have been asked “How do you do that when you are in the business of paying employee’s?”  We look at cash flow as the available operating funds. It is primarily impacted by expenditures.  So, if we can help minimize your expenditures, we can improve available operating funds thus improving cashflow.

Because labor is, for most businesses, the greatest expenditure, it has the potential to see either the greatest cost or the greatest savings.  With the dramatic increase in Worker’s Comp. rates anything we can do to impact those costs could be significant.  HR Ledger® helps employers three ways when it comes to Worker’s Comp. Premium:

  1. We properly identify those pay types which are considered in the gross pay for an employee.
  2. We track the Worker’s Comp rate associated with the class of work being performed.
  3. We provide summary reports and data files for reporting, auditing, and payment of liabilities.

We handle Worker’s Comp. tracking for about 78% of our clients.  We report to or meet the specifications of each of the 27 carriers we send data to.  However, there is a trap!  Worker’s Comp. Premium is calculated from gross wage.  Some carriers allow overtime and double time hours to be calculated at straight time rate and tips are dealt with independently.  But what about expense reimbursement, travel, lodging, car allowance?  Those can all be pay categories and if your payroll system or processor cannot account for those you are paying too much in premium.  Our system allows us to determine which pay categories are include or excluded from the gross reported wages.  We do it by carrier and by individual client, making sure our clients only pay for what they have contracted.

Another area where employers hurt themselves is not adjusting Worker’s Comp rates for different work classifications.  As an employee moves between work classifications, the correct rate should be chosen, and the liability can be calculated based on real work not the most expensive category.  Please note some carrier require you always pay the higher rate regardless of job being performed.

Lastly, if your Worker’s Comp. carrier requires an audit at the end of each coverage year and you dread the idea of having to come up with a big payment . . . we can help.    First, we can provide a report with each payroll that tells you what your Worker’s Comp. liability is.  If business is booming and you know you will have a big true up, we can help you prepare.  Secondly, we can send activity files to your carrier so at true up they already have the data.  You won’t have to scramble to put all your payroll records together as the auditor sits in your office.  And lastly, we link to your carrier, so you can pay your premiums monthly as the liability is created.  Employee hours go down? – So, will your payment.

Helping you manage your Worker’s Comp. Premium is one of the ways HR Ledger®  helps your cashflow.

HR Ledger can help.

Please call Malcolm or Scott today at 800-451-1136.

Written by:

Scott Evers

Scott Evers

Vice President Sales and Marketing