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Feb. 27, 2001

Labor Ready audit finds $734,000 workers' compensation owed

TUMWATER - A statewide audit of Labor Ready - a temporary help firm - by the Department of Labor & Industries (L&I) found the firm owes more than $734,000 for workers' compensation premiums, interest and penalties.

The audit, for calendar year 1998 and 19 Labor Ready locations in Washington, found employees' hours reported in the wrong risk classifications. Risk classes determine the amount of workers' compensation premium employers and employees must pay.

Workers' compensation premiums pay for benefits when workers are hurt on the job. Benefits can include medical costs, partial wage replacement payments, vocational services, disability payments and pensions.

L&I today ordered Labor Ready to pay nearly $498,000 in workers' compensation premiums and more than $236,000 in late penalties and interest. Audits for 1999 and 2000 also will be conducted. In addition, L&I will provide training to Labor Ready staff responsible for reporting risk class hours and paying premiums.

The Building and Trades Department of the AFL-CIO brought concerns to L&I last October that Labor Ready reported worker hours incorrectly during 1998, therefore paying less in premiums. After a preliminary review, L&I initiated an audit.

The department's audit team found that the firm's misreporting resulted in both under- and over-payments of workers' compensation premiums.

For example, the firm misreported construction cleanup activities as grounds maintenance, which has a rate of 40 cents per hour, rather than the class for construction work at the rate of $1.20 per hour. Misreporting between those classes accounted for about 75 percent of missed premiums - $383,000.

The firm overpaid premiums, for example when it misreported specialty contractors such as electricians and plumbers in the general construction class at a rate of $1.20 per hour. Those hours should have been reported in the class for machine operators; skilled craft persons - plant or shop operations which has a rate of about 70 cents an hour.

Labor Ready fully cooperated with the audit. The firm has 30 days to ask the department for reconsideration or file an appeal with the Board of Industrial Insurance Appeals.

Employers who are unsure if they are reporting employees in the appropriate risk class can contact their L&I policy manager or call 360-902-4817.

Labor & Industries manages the state's workers' compensation system. It provides coverage for about 163,000 employers and 1.9 million workers.

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