Blog · Oct 29, 2026

How to prepare for a workers' comp audit: a checklist for contractors

A workers' comp premium audit is routine. Every policy gets one when it ends. Whether it's a minor adjustment or a five-figure surprise mostly depends on how organized you are. Here's what auditors look at and how to prepare.

What the auditor is doing

Your workers' comp premium was originally based on an estimated payroll. The audit replaces the estimates with the actual figures:

1. Total payroll for the policy period
2. Class codes. Each employee's pay is assigned to the right job classification (carpentry, clerical, outside sales…)
3. Subcontractors. Payments to subs, and whether each one had its own coverage
4. Officers and owners. Included or excluded, and the minimum and maximum payroll rules for them

Then the insurer recalculates the premium and bills or refunds the difference.

The checklist

Payroll records

• Payroll register or summary for the full policy period, by employee
• Quarterly Form 941 and state unemployment (SUTA) reports
• W-2/W-3 totals if the audit covers a calendar year
• Overtime premium. In many states, the extra half of time-and-a-half can be excluded. Have overtime broken out.
• Tips, bonuses, per diems and expense reimbursements, separated. Some are excluded from payroll.

Class codes

• A list of employees with job duties
• Time records for employees who split work between classes, if your state allows splitting

Subcontractors (the biggest source of surprises)

• 1099s and a ledger of payments to each sub
• A certificate of insurance showing workers' comp for each sub, valid for the full period they worked
• Renewal certificates for subs whose policies expired during the year
• State exemption certificates for sole proprietors or officers claiming an exemption
• Subcontracts or purchase orders

Owners and officers

• Officer and owner payroll, and whether each is included or excluded on the policy

The subcontractor section deserves extra time

If a sub can't be shown to have had workers' comp for the whole period, your auditor will usually add their payroll, or an estimate based on what you paid, to your premium. In high-hazard trades, that adds up quickly. The workers' comp audit calculator estimates it, and workers' comp audits and uninsured subcontractors explains the details.

For each sub paid during the policy period:

1. Find the COI that covered the dates they worked.
2. If it expired mid-period, find the renewal.
3. If you can't find one, ask the sub's agent for certificates covering those past dates now, before the audit. Agents can usually issue certificates showing historical policy terms.

Mistakes that cost money

• Lumping everyone into the highest class code. Clerical staff and outside sales generally belong in their own low-rate classes if they meet the rules.
• Not separating overtime premium. Where allowed, it's free money.
• Missing sub certificates. See above.
• Ignoring the audit. If you don't respond, insurers can charge an estimated premium that's often far above your actual exposure.
• Not reviewing the result. Read the audit worksheet. If a class code or sub charge looks wrong, dispute it in writing with documents. Ask your broker to help.

After the audit

• Adjust next year's estimate so your deposit matches reality and you avoid a big bill next time.
• Fix the sub process so certificates stay current all year, not just at audit time. See COI expiration for a renewal schedule.

Make next year's audit easy

Certy keeps a current, dated certificate of insurance for every sub. It reads each ACORD 25, flags missing workers' comp, and reminds subs before policies expire. At audit time, you open the dashboard instead of searching inboxes.

This article is general information, not tax, legal or insurance advice. Audit rules vary by state and carrier.

Frequently asked questions