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Discussion Starter · #1 ·
I hired my first employee this year and it's my first year paying worker's comp. The insurance company put us into the highest class code they could - 5645 Carpentry and Siding - based on doing some framing and a few basements a year. My premium up front is about $8,000 for one guy! I don't do any siding and most of what I do falls under 5437 Installation of Cabinets or Interior Trim. I was told that I could do separation of payroll and get money back at the audit. This requires me keeping records and assigning the amount I pay my employee to different class codes. I also do jobs that are ceramic tile installation only, sheetrock only, and even lawn maintenance. My question is, exactly HOW do I keep the records for this separation of payroll. I've read many instances of auditors denying it and lumping everything into the higher category during the audit because it wasn't done right. I've asked my agent but he's useless. I even tried calling the insurance company and they were no help.

Do I take the weekly check amount and divide it by hours worked/money earned in each different class code? Should I include a description of exactly what they did or just use the class codes? Can I make my own chart? Should I give daily or weekly descriptions of work done broken down my hour and pay? I'd love to hear from anyone who currently does this and how you do it. Thanks.

Also, what code do kitchen and bathroom remodels fall under? I've been told that it falls under the higher 5645 code, but then I read if your not framing, but using existing walls and just replacing cabinets plus installing new tile, then it's a lower code. Still, agents are telling me it falls under the higher code, and I can't see why if nothing structural is being done.
 

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You need to keep detailed records of what hours were spent on what classification. I write it in on my time cards...total hours for the day and individual hours for different classifications that may have been performed during that day.
A bathroom remodel can/does include a number of different classifications. Plumbing, sheetrock, tile, electrical, cabinet install, carpentry etc. so you need to keep detailed daily records of how much time was spent for those different tasks.
They won't accept going back and guessing at time spent after the fact, daily bookkeeping habits as proof is what will keep you out of trouble.
 

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Discussion Starter · #3 ·
You need to keep detailed records of what hours were spent on what classification. I write it in on my time cards...total hours for the day and individual hours for different classifications that may have been performed during that day.
A bathroom remodel can/does include a number of different classifications. Plumbing, sheetrock, tile, electrical, cabinet install, carpentry etc. so you need to keep detailed daily records of how much time was spent for those different tasks.
They won't accept going back and guessing at time spent after the fact, daily bookkeeping habits as proof is what will keep you out of trouble.
Thank you. Knowing I have to keep daily records helps. Do you have to submit all the possible class codes to your insurance company at the beginning of the policy year in order to use them? Or can you just show them to the auditor. It's possible you can do certain jobs during the year that you didn't realize you'd be doing. Also, do you just write the class codes on your time cards or do you give a description of work performed. I'm worried that the auditor may ask specifically what was done because he won't believe that I know how to code properly.
 

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You'll want to ask your agent for more specifics as to your actual policy and what they require to make sure they will accept it in the case of an audit. Don't want to assume that internet advice from someone will keep you out of trouble, your broker might have different needs. If you're already being audited, you will need to present details right away without needing to go back and guess at what previous projects entailed, otherwise that's what they mean by they'll just have to assume the highest classification.

I've been able to have classifications added in the middle of a policy year.
I just use "plumbing" "tile" or whatever on the time cards. Easier for me to keep track of then memorizing or checking the sheets to be sure I have the right number code for a classification. 16 years on my policy and no audits *knocks on wood* though I'm confident I'd pass with flying colors.
 

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Discussion Starter · #5 ·
Honestly, my agent has been NO help at all with this which is why I'm turning to people like you who have already done it and may be able to give me some advice. He's even gone so far as to tell me I probably can't do this just so he doesn't have to do the work finding it out.
 

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Here's what my broker tells me. Carpentry NOC (No Other Class) just about covers all. Carpentry - Interior Trim / Cabinet / Wood Flooring Installation classification is less ---- some of us start there to keep the bill low - subject to audit.

When using Carpentry NOC my broker says watch out for roofing, siding, framing. Keep those at 10% or less of total payroll - it will wash with the NOC classification. If above --- document the higher rate when it occurs. Of course allow for the higher rate when doing the job.
 

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You don't state where you are from. Rules vary from location to location. Here in Ontario they make it almost impossible to divide you account. We tried to have different parts of our company classed at a lower rate, and wsib disallowed it, and put all our labour in the higher rate. I guess if they allowed it, everyone would move all their income into the lower category.
 

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You don't state where you are from. Rules vary from location to location. Here in Ontario they make it almost impossible to divide you account. We tried to have different parts of our company classed at a lower rate, and wsib disallowed it, and put all our labour in the higher rate. I guess if they allowed it, everyone would move all their income into the lower category.
And you left out the part about WSIB needing to pad their pockets on the backs of the honest.

But seriously to the OP, take the advice of one of the other posters and get something from your broker or insurance company - in writing - of what they will accept come audit time. Anything else is just assuming no matter how thorough you are.

For Ontario, don't worry, we are going down faster than a sack of hammers. There is no reason why something like general residential homebuilding should be almost 10% of wages for WSIB when in other provinces that same work only costs 2%. If you are doing work that is "less dangerous" then you shouldn't have to pay the same rate as other "more dangerous" work. Its like the old saying, you can't have your cake and eat it too, unless you are the WSIB...
 

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I use Exak time to track for my employees hours when the clock in they put what type of work they are performing. I use the pocket clock app for Exak time. Then I can print a report of what we do for our workmans comp. I've gone through a couple of audits and I can say it does help a lot when you can had the auditor a printout of how many hours were in each type if work then the math can be completed to arrive at the amount of payroll was preformed by each class.
 

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You need to find another broker. Insurance companies won't usually talk direct to Insureds. It's up to the agent or broker to advise you. It may interest you to know that anywhere from 10%-20% of the premiums you pay go pay the broker's commissions, so if they aren't helping you through the process, then you need to find one who is giving you value for what you are paying.

Best to have your various class codes determined and established at the start of the policy term. You can add new class codes for additional operations when doing your year-end audit but then you have no negotiating power with the insurer. They'll likely charge you full rate with no modifications or discounts because this wasn't an operation "you anticipated doing". You can set up class codes and have $0 estimated payroll, but then at least you will have a rate negotiated, haggled and established; so no big surprises at year-end audit time. Once your broker has helped you determine all the different class codes you might use for the coming year, then you will know how to log your worker's hours and assign the appropriate class code. Auditors will question if you try to back-track and do a whole year's worth of time cards at year-end audit time. They prefer to see you log hours and use appropriate class codes on a week by week basis. (Some pre-conceived notion that you aren't trying to fudge numbers to arrive at a certain budget, as opposed to reporting actual work operations as they truly occur.)

I'm in Ontario so don't do any Workers Comp here as it is government-run in this province, however, I've had clients with cross-border operations and helped with audits on their US Workers Comp (with private insurers), and if I couldn't help them re complexity, then I would put them in touch with a US Workers Comp consultant who could make sure that the audits were fair and accurate. Again, you need to find another broker who is going to do the job they are getting paid for.
 

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SectorSecurity said:
The thing I hate most about WSIB is they have all these different class codes with different rates, then they just lump you into the highest rated class and give you the run around as to why you don't qualify for the cheaper class.
Depending on your volume it maybe cheaper for you to incorporate another company for office staff which is pennies on the hundred compared to dollars for trades which follows over to the office if all done under one umbrella. WSIB will argue this with you, but if it is a complete separate company and invoices your construction company then your legal.
 

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Depending on your volume it maybe cheaper for you to incorporate another company for office staff which is pennies on the hundred compared to dollars for trades which follows over to the office if all done under one umbrella. WSIB will argue this with you, but if it is a complete separate company and invoices your construction company then your legal.
Luckily I am a 1 man show, I wanted to go under a security installer classification but they put me under construction which is several dollars more.
 
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