Preparing For A Successful Audit
All members of the HomeBuilders SIF are required to submit to an annual audit of their payroll records at the conclusion of each fund year, or when their coverage is no longer in force. The purpose of the annual audit is to ensure that you pay only the appropriate premiums due for your business. The auditor is able to review classifications, payrolls and any specific rules that may apply to your business during this time.
What Records Must You Furnish To The Auditor?
Upload Your Audit Documentation Here:
*All fields are required and must be entered to upload documents.
*If there was no labor during the coverage period, please download the checklist above for instructions.
*Please enter the Owner/Officer email address in the first “Email” field
Maintaining Certificates of Insurance
Obtaining and maintaining certificates of insurance can save you time and money at audit, as you must furnish proof that each subcontractor used during the policy period had workers’ compensation coverage in force for the policy period, or that payroll was reported for the work performed. You should always make certain the certificates correspond to the time frame worked by the individual subcontractors.
When it comes to maintaining certificates of insurance on file, it helps to Know the CODE.
Confirm the effective dates of coverage and expiration before work begins.
Obtain certificates directly from the insurance company or agent of the subcontractor.
Do not accept certificates that indicate “For Bid Purposes Only” or “To Be Determined” as the certificate holder or “Binder/Binding” in the policy number section. Make sure the workers’ comp section is filled out.
Examine the certificate to make sure it provides Louisiana benefits. This is especially important when using subcontractors hired from out of state.
Certificates of Insurance should be obtained for subcontractors prior to their work beginning on any of your jobsites. If you are unable to determine the validity of a certificate, contact the agent or company shown as providing the coverage on the certificate. This preventive maintenance can alleviate numerous problems for you at audit. If you hire subcontractors from out of state, it is imperative that you verify that their workers’ comp coverage specifically provides coverage for Louisiana. If the sub does not have valid Louisiana workers’ comp coverage for work performed in Louisiana, you will be responsible for the workers’ comp premiums for these workers. Again, if you are unsure, contact the agent or company shown on the Certificate of Insurance or contact our office and we will verify the validity of the certificates. To ensure that all subcontractors’ workers’ comp coverage is still in force, we recommend that you implement one or more of the following diary or tracking systems:
- Obtain a new Certificate of Insurance prior to each job the subcontractor performs for you.
- Periodically check all subcontractors’ workers’ comp coverage is still in force by contacting either the Agent or Company shown on the Certificate.
- Verify the subcontractors’ workers’ comp coverage on the Louisiana Workforce Commission’s website by clicking on the link in the top right corner of the web page.
- Enter the subcontractor’s business name and select Search.
- You can also enter a prior date, but you cannot enter a future date.
- If the subcontractor has workers’ comp for the date entered, the Search will return policy information. Otherwise, you will see a message stating no records were found matching your search criteria.
NOTE: You must retain Certificates on file for each sub, as Certificates are required for the premium audit performed at the end of the coverage period.
General Knowledge
You must provide the auditor properly maintained records which detail the overtime pay. If time and a half is paid, then one third of this total is excluded. If double time is paid, then one half of the total is excluded. For example, if a worker is normally paid $10 per hour worked, and then $15 for all overtime hours worked, you would only report payroll and pay premium on the $10 paid for each hour, provided your records clearly document the overtime hours worked for each employee.
Employees – Payroll for employees should be reported at 100%, excluding overtime as outlined above, utilizing the classifications that best describe the operations of your business.
Contract Labor – These individuals are considered “employees” and their payroll should be reported at 100%, using the classification that best describes the operations of your business. These are usually workers that you send 1099s.
Miscellaneous Labor – These individuals are considered “employees” and their payroll should be reported at 100%, using the classification that best describes the operations of your business. Workers who perform various jobs throughout the day are also properly classified in the same manner.
Subcontractors – Payroll for uninsured subcontractors is properly classified to the code that best describes the work performed by the subcontractor. If you do not know how to classify a particular subcontractor, please contact your agent or you may contact your Client Services Representative in our office
Invoices – If detailed invoices are obtained from your subcontractor, clearly separating materials purchased and labor attributable to a job, then the labor amount will be used as the payroll, subject to certain limitations for each class code. If details are not provided to the auditor, then ten percent (10%) will be the maximum credit allowed for materials (only applicable to subcontractors).
Heavy Equipment – If the invoice shows the use of heavy equipment with an operator, the payroll portion of the invoice will be reported at 33%. Heavy equipment refers to earthmovers, graders, bulldozers or other similar equipment. You will need to document the use of heavy equipment at the time of audit in order to use this percentage.
Frequently Asked Questions
Contract Labor, Miscellaneous Laborers and Helpers are considered “employees” and their payroll must be reported at 100%, using the classification that best describes the operations of your business. Workers who perform various jobs throughout the day are also properly classified in the same manner. Payroll for subcontractors is properly classified to the code that best describes the work performed by the subcontractor. If detailed invoices are obtained from the subcontractor, clearly separating materials purchased and labor attributable to a job, then the labor amount will be used as the payroll, subject to certain limitations for each class code. If details are not provided to the auditor, ten percent (10%) will be the maximum credit allowed for materials.
Yes, you must maintain Certificates of Insurance for all subcontractors performing work for you. Certificates of Insurance are required for the premium audit that will be performed at the end of the coverage period.
To ensure that all subcontractors’ workers’ comp coverage is still in force, we recommend that you implement one or more of the following diary or tracking systems:
- Obtain a new Certificate of Insurance prior to each job the subcontractor performs for you.
- Periodically check all subcontractors’ workers’ comp coverage is still in force by contacting either the Agent or Company shown on the Certificate.
- Verify the subcontractors’ workers’ comp coverage on the Louisiana Workforce Commission’s website by following the link in the top right corner of the web page.
The Executive Supervisor classification, class code 5606, only applies to an individual who exercises supervision through another jobsite supervisor or foreman. Typically, this employee spends some time in the office as well as traveling from jobsite to jobsite checking the
status of jobs in progress. Any individual who directly supervises employees does not qualify for class code 5606. Individuals who directly supervise employees are properly classified to the governing class code (the classification that best describes the operations of your business).
The Debris Removal classification, class code 5610, is intended to be used for work performed by a subcontractor who is in the business of debris removal or clean-up. When this type of work is performed by direct employees, contract or miscellaneous labor, no deduction is allowed and the payroll for these workers is properly classified to the governing class code (the classification that best describes the operations of your business).
Contact your Client Services Representative at 1.877.542.2743 or 225.387.0286.