Workers' comp audits: what to have ready

By Ashton McLellan · Last reviewed October 2026

Your workers' comp premium starts as an estimate. After the policy year ends, the insurer audits your real payroll and sends a refund or a bill. Clean records keep that bill fair.

Why the bill jumps

• Payroll grew past the estimate. Normal for a growing company, and easy to plan for.
• Payroll landed in the wrong class. Field work is rated far higher than office work. If your records do not show who did what, more payroll can end up in the expensive class.
• Subs had no coverage. If a subcontractor did not carry its own workers' comp during the work, the auditor may count what you paid them as your payroll.
• Overtime was not split out. In many states the extra half of time-and-a-half pay is not counted, but only if your payroll records show it separately.

The audit packet

1. Payroll reports for the policy period, by employee, with each person's job.
2. Quarterly federal payroll returns (Form 941) and state unemployment wage reports.
3. Your general ledger or check register.
4. A list of every subcontractor and what you paid them, with W-9s.
5. A certificate of insurance from each sub showing workers' comp coverage for the dates they worked for you.
6. Overtime records, if your state excludes the overtime premium.
7. Owner and officer details, and whether owners are included or excluded from coverage.

The certificate rule

Ask every sub for a certificate of insurance before the first job, and again when it expires. Check that the policy dates cover the work dates. Keep them in one folder with the W-9s. This single habit saves more audit money than anything else on this page.

Office staff

People who only work in the office can usually go in a much cheaper clerical class. If someone splits time between the office and job sites, the rules vary by state. Ask your agent how to record it.

After the audit

1. Read the audit worksheet line by line. Check class codes, payroll totals and any sub payroll added.
2. If something is wrong, send the corrected records to your agent and the insurer in writing, quickly.
3. Update next year's payroll estimate so the next audit has fewer surprises.

A few states run workers' comp through a state fund, and rating rules differ by state. Your agent knows yours.