What to do if you've been audited

Some business owners will be able to handle a workers compensation L&I wage audit without support. If your records are up to date and easily available in digital form, then you can simply give the L&I auditor a thumb drive, or set up a drop box, and you should have very little trouble. If the auditor begins asking questions that you can’t answer, or you don’t want to have to be available to answer questions as frequently as the L&I auditor is asking, then you might want to consider asking for support.

If you’d like to start on your own, and see how it goes, here are some helpful tricks:

1) Don’t waste your valuable time arranging the records for the L&I auditor. The auditor will expect an overwhelming amount of material. They’re used to it. They will ask for anything they need that is more specific regarding time records, wages, risk classifications, or evidence that an employee or group of employees were categorized correctly.

2) Don’t answer questions from the L&I auditor when you’re doing something else. (Obviously this is not always possible). It’s easy to miss what the L&I auditor is really looking for. The L&I auditor might ask about your office staff, leading you go out of your way to prove that they are office staff preforming office duties. But really you may have just talked yourself into a fine. The auditor may be asking about your office staff because they spotted a batch of materials stored in the wrong room, with your office staff, and you’re about to have all your office workers reclassified into a higher-cost risk classification category because your office staff aren’t separated from storage by a wall. (See our guide below for more information). Don’t assume.

3) Don’t argue with the L&I auditor about anything related to workers compensation or the rules. Most auditors will be friendly and helpful. But a few use some tricks to get higher fines. One common trick is to bait you with insults “Don’t you know?” “A good business owner would be aware..’ (and what they’re saying may or may not even be true). “You have to…” Anyone would be surprised and feeling defensive. But once you get angry, the auditor can discount your answers, reclassify your workers, and leave you to defend your business in the expensive, complicated, and notoriously unreliable appeal process.

4) Don’t ask for an L&I supervisor. to review your workers compensation auditor. Washington State’s culture and rules generally discourage L&I supervisors, or any other state agency staff, from siding with the public against a state employee. All that will happen is that the employee will work harder to make you look bad, to justify their earlier bad behavior toward your company. So many nice, polite, reasonable small business owners learn this lesson the hard way. If you are being treated rudely, document it. Ask for better treatment, but don’t try to push your company’s issues up the chain of command unless you can create a plausible excuse, such as if your auditor becomes unresponsive, or if you have a question and your auditor is not immediately available. And always phrase your question as, “I just want to be sure I’m doing this right…” don’t accuse the auditor. Just also don’t accept poor treatment. It’s a balance.

Elizabeth Steen has 10 years experience in regulatory compliance and agency regulation. She’s worked in the United States Senate and as a contractor with federal and state agencies that include TSA, DHS, and the SEC.

Small business owners and workers compensation L&I audits in Washington

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