California created the dual-wage system for 19 construction industry classifications to provide a more equitable premium distribution. Under the system, construction industry employers may pay lower premium rates for workers whose hourly wages are above certain thresholds. Qualifying for the high-wage, low-rate classes requires accurate, verifiable record-keeping.
In accordance with a rules clarification last year by the Workers’ Compensation Insurance Ratings Bureau, construction records must clearly show distinct information for each employee, including:
State Fund payroll auditors will review these logs during your premium audit. Without clear verifiable records on hours, duties, and wages, the auditor will assign all construction payroll into the appropriate low-wage, high-rate classifications.
For your own protection, it is important to fill out the payroll report as accurately as possible. If an employer does not maintain separate records for each classification, and the end-of-year audit cannot determine the correct classifications, the higher-rated classification will apply.
Employers can benefit from any lower-rated classifications for which they qualify. With good record-keeping habits, streamline the audit process, save premium dollars, and reduce the possibility of unexpected premium owed at the end of the policy period.
