How to Prepare for a Workers’ Comp Premium Audit: A Contractor’s Checklist (2026)

An auditor checks four things: your payroll, your subcontractors, your owner/officer payroll, and whether your people are classified correctly. Prepare those four and you’ll avoid the two bad outcomes — a surprise bill, or quietly overpaying because you didn’t push back.

1. Subcontractors (where most of the money is)

• A current certificate of insurance with a workers’ comp line for every sub.
• Dates that cover the entire period each sub worked — check for mid-job lapses.
• 1099s and contracts that support “these were real subs, not employees.”

If a sub can’t be documented, their pay gets reclassified as your payroll at your class rate. Run your subs through the COI Gap Checker first.

2. Payroll records

• Payroll journal/summary, plus 941s, W-2/W-3, and state unemployment filings to reconcile against.
• Wages broken out so the auditor can see regular vs overtime.

3. Don’t overpay on overtime

In most states, only the straight-time portion of overtime counts toward premium — the extra “half” in time-and-a-half is excluded. A quick way to find the excludable amount: divide total overtime pay by 3. If your records don’t separate overtime, you can get charged on the full amount. (A handful of states — PA, DE, UT, NV — include full overtime, so confirm yours.)

4. Owner / officer payroll

Owners and officers can often be capped at a state minimum/maximum or excluded entirely. Auditors sometimes drop the full owner salary into the governing class by default. Know your state’s cap and check the number.

5. Classification

Auditors compare what people actually did to how they’re classified. Someone coded “clerical” who’s regularly on a jobsite gets bumped to a higher-rated class. A written job description with time breakdowns is what wins a classification dispute — a verbal explanation won’t. More on class-code overcharges →

Stay audit-ready all year, not the week before

The contractors who don’t get surprised treat readiness as a monthly habit: collect COIs up front, re-check on expiration, keep class duties documented. That’s the workflow we’re building into a tool that hands you an audit-ready binder on demand. Get early access →