Falsifying Payroll Information to Your Workers’ Comp Insurance Provider
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Workers’ Compensation fraud is a serious offense that often comes with equally severe consequences. When employers falsify payroll information to their carriers, they may be committing Workers’ Compensation fraud.
Providing inaccurate workforce numbers and misrepresenting employee responsibilities are examples of how employers might falsify payroll information to their carriers. Both acts are considered Workers’ Compensation fraud and might result in criminal prosecution as well as financial penalties. Lowering payroll numbers can benefit employers, as fewer employees typically means less expensive Workers’ Compensation premiums. By getting pay-as-you go coverage, employers can provide monthly payroll numbers to their carriers who will base premiums off of that information, instead of broad yearly estimates. This can help employers keep premiums low without illegally falsifying payroll information to their carriers.
For more information about how our Workers’ Compensation insurance brokers can help your company, call NPN Brokers today at (866) 340-9120.
Examples of How Employers Might Falsify Payroll Information to Workers’ Comp Insurance Providers
Falsifying payroll information is considered Workers’ Compensation fraud, which is illegal. In order to avoid committing Workers’ Compensation fraud, employers must be careful and ensure they provide accurate information to their carriers regarding a company’s payroll. This means providing updated payroll numbers to your carrier when requested and accurately explaining the responsibilities of your employees.
Inaccurate Employee Numbers
In most states, Workers’ Compensation premiums are largely based on payroll numbers, as well as other risk factors. Typically, the more workers you employ, the higher your premiums might be. When employers falsify payroll numbers to their carriers, whether intentionally or unintentionally, that may be considered fraud. Our Workers’ Compensation insurance brokers can review your payroll numbers to double check that you are sending the right information to your carrier. Generally, this is done on an annual basis during an audit when a carrier is reviewing policy premiums. Carriers might also ask for a company’s payroll numbers when initially establishing the price of a policy. Employers should provide accurate payroll numbers for all of their employees, even if they are not required to have coverage for all employees under their state’s Workers’ Compensation law. Your carrier needs this information to gauge your risk to insure.
Inaccurate Employee Responsibilities
Certain lines of work are more dangerous than others. Your Workers’ Compensation insurance carrier wants to know exactly what responsibilities your employees have on a daily basis to accurately assess your company’s risk to insure. When providing payroll information to a carrier, employers must define the type of work certain employees do. Minimizing an employee’s engagement with hazardous materials or their responsibilities will likely be considered fraud. This is why it is crucial for employers to be honest and forthright about employees’ daily responsibilities when seeking a Workers’ Compensation plan. If employee responsibilities change, alert your carrier as soon as possible. Changes in employee responsibilities might lead to changes in your policy and premiums.
Consequences of Falsifying Payroll Information to Your Workers’ Comp Insurance Provider
Because falsifying payroll information to Workers’ Compensation carriers is considered fraud, employers might face considerable backlash. Such acts may be seen as criminal violations of your state’s Workers’ Compensation code, resulting in severe consequences.
Most states have agencies solely dedicated to investigating instances of Workers’ Compensation fraud. For example, Florida has the Bureau of Workers’ Compensation Fraud which investigates employers that falsify payroll information to carriers and others that commit similar offenses. Falsifying payroll information might lead to criminal charges and other financial penalties for employers, even if they were unaware of violations. Employers might even face considerable jail time for Workers’ Compensation fraud involving falsified payroll information.
If you falsify payroll information to your carrier, it might drop your coverage. This could leave your company without Workers’ Compensation insurance, making it vulnerable to litigation if an employee is injured at work. Companies that do not have the necessary coverage at any given time might face additional penalties from their state Workers’ Compensation agencies, such as lofty fines and detrimental stop-work orders.
In some instances, employers might not intentionally falsify payroll information, and instead might make a simple mistake when reporting to their carriers, resulting in similar consequences. Our brokers can review information you send to your carrier, find irregularities, and flag changes in payroll so that you can avoid these consequences.
How to Keep Payroll Numbers Low without Falsifying Information to Your Workers’ Comp Insurance Provider
Some employers might falsify payroll information to their carriers in an attempt to keep Workers’ Compensation premiums low. Not only is this inadvisable, but it is also illegal, and might lead to many all sorts of problems for employers. Falsifying payroll numbers is also totally unnecessary, as types of Workers’ Compensation policies exist that allow employers to keep premiums as low as possible for companies with frequent payroll changes.
Most Workers’ Compensation carriers request annual payroll numbers from companies that include all workers for an entire year. Of course, throughout the year, company workforces might change dramatically, resulting in fewer employees. When your Workers’ Compensation premiums don’t reflect those changes, it can seem as though you are paying for coverage for workers you don’t even employ. And, in some cases, you might be.
To avoid this issue and keep payroll numbers low and accurate, our brokers can match your company with a pay-as-you-go policy. This type of Workers’ Compensation insurance allows employers to send real-time payroll information to carriers on a monthly basis. That means you will only pay for coverage for workers currently employed by your company. Pay-as-you-go coverage can let you cut down on Workers’ Compensation costs stemming from payroll numbers and allow you to save considerably more on premiums than traditional policies might.
Our Brokers Can Help You Find Workers’ Comp Insurance
To learn how our Workers’ Compensation insurance brokers can find your business the coverage it needs, call NPN Brokers now at (866) 340-9120.