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Audits

​A payroll audit is completed after the end of each coverage year to ensure that the appropriate amount of premium is collected for the exposure, which is measured by the amount of payroll.

Audit Timeline

May 30 | Audit notifications mailed to all members

June 30 | Deadline for scheduling audits

July/August | All audits completed

September 30 | Deadline for audit changes and corrections

October 1 | Invoice or overpayment checks mailed to members

Preparing for an Audit

Complete the following steps to prepare for your audit:

  • Gather all individual payroll records by work code (department).
  • Verify that total payroll is equal to the total of the quarterly 941 Federal Tax Deposit Reports.
  • A certificate of workers’ compensation insurance must be on file for each independent contractor paid (form 1099 reportable) during the audited policy period. If a certificate is not on file, the member is responsible for workers’ compensation coverage and will be charged the appropriate premium.
  • Count the total number of employees categorized as full-time, part-time and seasonal. Also determine the total number of statutory volunteers (firefighters, reserve police officers, EMTs, EMT trainees and certified first aid volunteers).
    • Calculate the amount paid to each employee, if any. The list must include all individuals employed during the audit period, whether or not they are still employed.
    • Reserve police officers’ payroll is determined by the time spent working, training and attending meetings. The total number of hours is multiplied by $10 to determine a payroll. Payroll should be allocated to code 7720V.
    • Iowa law mandates coverage for mayors, city council members and county boards of supervisors. Premiums are based on a minimum annual payroll of $300 per person. If paid more than $300, premiums are based on the actual amount including payment for meeting attendance. If they elect to donate their pay to the city, the minimum payroll is used. Payroll should be allocated to code 8810V.
    • Coverage for members of other boards and commissions is also mandated but premium is charged only on the amount they are paid, if any. The $300 minimum does not apply.
    • Premium for volunteer firefighters, EMTs and first responders is also based on a $300 minimum annual payroll per volunteer:

Volunteer Firefighter payroll is allocated to IMWCA class code 7711:

  • Wages less than $300, include at minimum of $300.
  • Wages greater than $300, include at actual wages.
Volunteer EMT payroll is allocated to 7705V:
  • Wages less than $300, include at a minimum of $300.
  • Wages greater than $300, include at actual wages.
Combination Volunteer Firefighter/EMT payroll is allocated as follows:
  • If combined total payroll is greater than $300, use split and classify payroll in codes 7711 and 7705V.
  • If total payroll is less than $300, include at minimum of $300 in code 7711. There will be no exposure in code 7705V.
  • First responders are classified in 7711V and payroll determination is the same as firefighters.
    • If you have the medical-only coverage endorsement for non-statutory (casual) volunteers, include the total number of individuals who volunteered during the year.
    • Swimming pool employees are all classified under work code 9015 with the exception of park personnel who maintain the pool facility.
    • All airport personnel are included under the city’s coverage unless proof of other insurance is provided.
    • City attorneys generally have their own coverage. Verify coverage with a certificate of insurance from their attorney.
    • Payments for active military duty above and beyond accrued vacation pay are excluded from payroll for workers’ compensation. 

Overtime

Overtime means those hours worked for which there is an increase in the rate of pay:

  1. For work in any day or in any week in excess of the hours normally worked.
  2. For hours worked in excess of 8 hours in any day or 40 hours in any week.
  3. For work on Saturdays, Sundays or holidays.
Note: Forms of incentive pay commonly referred to as "shift differential" or "premium pay" associated with working other than normal day shift hours during the standard workweek are not to be considered overtime. In the case of guaranteed wage agreements, overtime means only those hours worked in excess of the number specified in such agreement.

Exclusion of Overtime Payroll

Payroll Records - The extra pay for overtime shall be excluded from the payroll on which premium is computed as indicated in (1) or (2) below, provided the insured’s books and records are maintained to show overtime pay separately by employee and in summary by classification. (i.e. 5506, 9402, etc).
  1. If the records show separately the extra pay earned for overtime, the entire extra pay shall be excluded.
  2. If the records show the total pay earned for overtime (regular pay plus overtime pay) in one combined amount, and time and one/half is paid for overtime, one-third of this total pay shall be excluded. If double time is paid for overtime and the total pay for such overtime is recorded separately, one-half of the total pay for double time shall be excluded.
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Contact Information

Phone: (800) 257-2708
Fax: (978) 367-2862
imwcainfo@iowaleague.org
Administered by the Iowa League of Cities