The statistics from the Washington Department of Labor & Industries (L&I) are sobering for small business owners. Most of us think we are doing everything right. Unfortunately, the vast majority of businesses - even responsible business owners doing their best - will likely face an audit and a fine. In 2017, Washington State L&I collected $178.8 million in “delinquent premiums” for employers that L&I determined had not paid the state the correct amount of insurance premiums for some or all of their employees. L&I audited 3,489 employers and 80% of these employers were found to owe a fine to L&I. https://www.lni.wa.gov/News/files/LNIFactsAndFigures.pdf
An attorney may not be able to eliminate a fine in all cases. If L&I decides that premiums have been underpaid because workers were reported in the wrong risk classification. However, working with the state employees to locate all the records necessary and to ease the audit process can make a big difference. L&I fines employers additional amounts for records that are insufficient or that cannot be located. Often the employers actually have the records and just didn’t understand what was being asked. L&I also estimates the fines whenever the records aren’t available, based on total wages paid. This can be a lot more expensive than a specific calculation of which employees were reported in the wrong category and how much the specific business actually underpaid to the state.
Business owners don’t have time to hassle with bureaucracy. A careful attorney can help make the process easier and can help the business make sure they aren’t over-paying for any inadvertent mistakes or a simple misunderstanding.
Elizabeth Steen is an attorney and mediator with 11 years experience helping small business owners and families in Washington D.C. and Washington State.