Few businesses have benefited from worker’s compensation insurance as much as restaurants. There are a plethora of job-related hazards restaurant employees face in order to maintain the day-to-day functions of the restaurant. These can include employees hurting their backs while lifting heavy objects, cutting appendages in the kitchen, and the list goes on.
Restaurants use Worker’s Compensation policies to help safeguard themselves against on-the-job injuries. But, these safeguards are subject to reviews by insurers, typically known as audits. An audit can occur when the estimated risk and actual risk of insurance coverage are not aligned. This can happen for several reasons, but happens most commonly when more employees get hurt than were expected.
Audits are typically accompanied by hefty bills. For small businesses, these audits can carry negative impacts that can derail it altogether. Here are a few tips to help you avoid getting an insurance audit, and what you can do if you are audited.
Work Safe. Work Clean
One of the only ways restaurant managers can avoid a Worker’s Compensation audit outside of the back office is to ensure their employees work safely and in a clean environment. You can do this with ongoing safety training, regular team meetings to discuss safety concerns, and promoting a culture of accountability within the business.
Regular safety training and team meetings allow managers to establish an open channel of communication with their employees about topics that relate to their personal well-being. The added bonus is that this is also good for worker morale because employees want to work for businesses that care about their well-being.
Promoting a culture of accountability is a way of backing up all of the talk during the meetings. Making sure your employees implement all previously established safety measures, and any new ones arising from training or meetings, lets them know that their safety is serious business.
Regularly Communicate Payroll Adjustments with Your Insurer
Remember: the policy estimate your insurer gave you does not leave room for growth. Insurers assume the estimated payroll you provided them is the MOST you will pay your employees during a given period.
For example, let’s say you took out a worker’s comp policy at the beginning of the year with an estimated $100,000 payroll. Toward the middle of the year, you find your business is growing and you need to hire a few more helping hands. If you have a bi-annual policy, your premium could easily double when it renews if you fail to let the insurer know about your expansion. Absorbing this cost increase can be tough, even for large businesses.
A simple way to avoid it is to let your insurer know when you hire new employees, that way they can adjust your monthly payments to accommodate your new premium instead of slapping you with a bill when you renew your policy.
What If I’ve Already Been Audited?
Being audited is scary. If your restaurant is being audited by your worker’s comp insurer, don’t panic. You can dispute the audit. You just need to do a little homework first.
First, you need to understand why your premium skyrocketed. Was it payroll related? Lapse of coverage? Etc. To find this information, you’ll need the original policy, any billing statements, and the audit papers. Check and make sure each of your employees are classified correctly and the payroll assigned to each classification. Compare it to the audit statement and if they don’t match, you may have a disputable claim.
Second, when confronting the insurance company, be specific about what errors you feel were made. The audit papers should include the reasoning of the auditor for your reference.
If these steps fail, contact a lawyer.