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MAINTAINING YOUR RECORDS FOR AUDIT PURPOSES WHAT IS A PREMIUM ADJUSTMENT? When your Workers' Compensation policy was issued you paid a deposit premium based on the nature of your business and estimates of your payroll. At the end of the policy period, we conduct an audit to compare the estimates against the actual figures and operations. Based on this comparison an adjustment is made. If the actual premium is less than what you already have paid, a refund will be made. If it's more, you will be billed for the difference. These adjustments are subject to any minimum premiums that apply. HOW WILL THE PREMIUM ADJUSTMENT BE MADE? On smaller, less complex operations we may e-mail you, call you, or mail you a request to ask you to provide the information via our online web -based portal, mail or telephone. If we require this information, we will provide an electronic link to, or a paper copy of, the necessary forms for you to complete. On larger, more complex operations one of our Premium Auditors will contact you for an appointment. You will be contacted either by e-mail, telephone or mail. If directed, the auditor will contact your accountant to obtain as much information as possible and contact you at a later time for additional information that may be needed. BASIS OF PREMIUM Remuneration (Payroll) in most states, includes: Payment of: Wages, bonuses, commissions, overtime,* sick pay, vacation pay,* tool allowances, contributions to individual retirement accounts, employee contributions to employee benefit plans. Payments on basis of: Piece work, incentive plans, profit sharing. The value of: Housing furnished to employees,* meals furnished to employees,* store certificates, merchandise and other dollar substitutes. Form 98456 5th Rev. 12-13 Printed in U.S.A. Remuneration does not include: a. Employer contributions to a group insurance or pension plan other than statutory plans of insurance. b. Special awards for individual inventions or discoveries. c. Overtime.* Subcontractors. In the absence of other insurance, most state laws hold a contractor responsible for injuries to employees of subcontractors. At the time of audit Certificates of Insurance must be available for subcontractors with employees, in order to avoid payment of premium. Independent Contractors, without employees, whose duties closely resemble those of an employee, will be considered your employee with the appropriate premium charged. The actual working relationship between you and the Independent Contractor is examined. Items such as, but not limited to: whether the work performed is an integral part of your operations, whether you have the right to control the details of the work, the method of payment, who supplied the materials used, does the person regularly work for others, whose regulatory authority did person operate under, whether the person is involved in a separate and distinct business offering the same services to the public. RECORDS As part of the policy conditions, we are allowed to examine your financial books and records to determine actual exposures and operations. We would appreciate your cooperation in making the needed records available for the auditor's inspection. What Records Will Be Needed? The records needed will vary. In most cases, the Premium Auditor will be able to obtain the necessary audit data from two or more of the following records: Journals, Ledgers, State and Federal Tax Reports, Individual Earning Cards, Checkbooks and Contracts. ew cF RAMwagementDMsian Jy/\'x REVIEWED & APPROVED BY.- V"° --� Risk janagement Analyst