Workers' compensation non-compliance penalties are assessed for:

• A. Underestimating assessable earnings
• B. Overestimating assessable earnings
• C. Filing late reports
• D. Not reporting new hires

Answer: (A)

Penalties for workers’ compensation non-compliance are tied to underreporting the amount of wages that are considered assessable earnings. Premiums are calculated based on those earnings, so reporting less than what was actually earned means the employer pays less than the due premium. When the discrepancy is found, the board typically assesses penalties and interest on the shortfall to deter underreporting and ensure funds are collected to cover the true risk level.

Underestimating assessable earnings is the issue that directly creates an underpayment scenario, which is why penalties are specifically associated with it. Overestimating earnings would lead to higher premiums than necessary but is not the primary trigger for penalties in the same way. Filing late reports or not reporting new hires are compliance concerns as well, and they can carry their own penalties or corrective actions, but the most direct and common reason penalties are assessed in this context is underreporting earnings.