Workers' Comp Audit Guide: How to Prep and Dispute

What the auditor will ask for

Workers' comp audits are largely a payroll exercise. The auditor — usually a contracted third party — will request:

• Quarterly 941s and state UI filings for the policy term
• Year-end payroll summary by employee with job descriptions
• Subcontractor list with totals and certificates of insurance
• General ledger detail for 'subcontractor' and '1099' expense accounts
• Cash-basis financials if you don't run payroll through a standard processor

The two biggest dispute opportunities

First: subs without certificates. If a sub didn't carry their own WC during the period, the auditor will reclassify the labor portion of their invoice as your payroll under whatever class code matches their work. The fix is straightforward — get certificates on file before the audit, not after. Late-arriving certificates can sometimes still credit back the premium.

Second: class code splits. If your office staff is being audited under your highest-rate field code, the difference can be enormous. Make sure your payroll register clearly separates clerical, supervisory, and field work — and that the auditor can see job titles per pay period.