Workers' Comp Premium Audit Checklist

A workers' comp premium audit reconciles your estimated payroll to what you actually paid — and picks up uninsured subcontractors as your employees. Good records turn the audit into a non-event; missing records turn it into a surprise bill. Use this checklist to prepare.

Payroll records

• Payroll register or summary for the policy period, by employee
• Payroll split by class code / job duty
• Overtime records (so overtime can be reduced to straight-time wage)
• Federal/state payroll tax filings (941s, DE 9/DE 9C) to tie out totals
• Dual-wage hourly records where the class code requires them

Subcontractors & 1099 labor

• Certificates of insurance for every subcontractor used during the period
• Total amounts paid to each subcontractor
• Written subcontractor agreements, if any
• List of any 1099 or day labor (these can be reclassified as employees)

Owners, officers & classification

• Owner/officer inclusion or exclusion elections on file
• Ownership percentages and job duties
• Description of each employee's actual work (to confirm class codes)
• Any clerical or outside-sales payroll that can be separated

Before the auditor arrives

• Reconcile your payroll total to your tax filings
• Pull certificates for any sub you can't immediately document
• Flag any class-code questions for your broker first
• Have last year's audit worksheet handy for comparison

FAQ

What's the #1 cause of a surprise audit bill?

Uninsured subcontractors. Without a certificate of insurance, an auditor can add what you paid a sub to your payroll and charge premium on it. Collect certificates from every sub.

Can I deduct overtime at the audit?

Often the overtime premium portion can be reduced to straight-time wage for rating — but only if you have records that separate it.

General information from Focus West Insurance Solutions (CA Lic. #0M32679), not legal or accounting advice; audit rules vary by carrier and state. Related: workers' comp in California · premium audit in the glossary.