Subject: Workers' Compensation Audits

Most workers compensation laws provide that an employer is responsible for the payment of compensation benefits to employees of its uninsured contractors.

It has come to our attention that there may be some confusion as how to account for the payroll of the above on your Workers' Compensation audits.

Haulers - If you hire someone to haul your product, you must request a Certificate of Workers' Compensation Insurance.  If, at audit, it is discovered that certificates were not obtained then one third (1/3) the cost of hire will be used as payroll and you will be responsible for the payment of additional premium.  We have discovered that some haulers have been providing certificates showing coverage for accident and death policies, these are not Workers' Compensation policies and the cost of hire will still be used to calculate your final premium.  You may also pay the premium due on your monthly reports to avoid additional premium at audit.

Mechanics - If you hire a mechanic you need a Certificate of Workers' Compensation Insurance.  If they do not provide one, and the mechanic provides his own truck and tools, then one half (1/2) the cost of hire will be used as payroll.  If the mechanic is furnished a truck and tools by you, the entire cost of the mechanic will be used as payroll at audit.

Contract Labor - If you hire contract labor from a service that provides temporary employees or short term employees, they must provide a Certificate of Workers' Compensation Insurance.  If you hire any other contract labor without a Certificate, 100% of the cost will be used as payroll at audit.

Sub Contractors - If you hire any sub contractors such as drillers, blasters or any other sub contractor that furthers your production of your product they must provide a Certificate of Workers' Compensation Insurance.  If they do not their cost of hire will be used to calculate your final premium.

If you have any questions, please contact your agent.