Workers’ Comp Audit Costs by State: Why the Same Sub Costs 5× More in One State

Two roofers pay the exact same $120,000 to uninsured subs. One gets a ~$25,000 audit bill; the other gets ~$5,000. Same trade, same payroll — different state. Workers’ comp rates vary enormously by location, and at audit that difference is real money.

How much does it actually vary?

The Oregon Department of Consumer and Business Services runs a respected biennial study comparing every state on the same mix of classes. In the 2024 study the national median “index rate” was about $1.09 per $100 of payroll, with the most expensive states (Hawaii, New Jersey, New York, California) running roughly 2–2.5× the median and the cheapest (North Dakota, Arkansas, West Virginia) around half of it. Top to bottom, that’s a ~5× spread.

So a class rate that’s, say, $8 per $100 in a low-cost state can be $15–20 for the same work in a high-cost one.

Why states differ so much

• Benefit levels — how much injured workers are paid varies by state law.
• Medical costs — the single biggest driver in most states.
• Litigation and friction — some states settle claims far more expensively.
• Competition and regulation — open-rating vs administered-pricing states price differently.

What this means for subcontractor exposure

When an uninsured sub’s pay gets added to your payroll at audit, it’s charged at your state’s rate for your class. So the same documentation gap costs a contractor in California or New York multiples of what it costs one in Texas or North Dakota. If you operate in a high-cost state, sloppy COI tracking is far more expensive — and worth fixing first.

Our audit exposure calculator reflects this directly: it starts from real 2024 Florida class rates and scales them to your state using that Oregon index, so the number you see is tuned to where you actually operate. Pick your state and trade and watch the estimate move.

A note on “monopolistic” states

Four states — North Dakota, Ohio, Washington, and Wyoming — run their own exclusive state funds with separate rate structures, so coverage there works differently than the NCCI/bureau states. The cost ranking still gives a useful sense of relative expense, but the mechanics differ.

You can’t change your state — but you can close the gaps

Rates are set above your pay grade. What you control is whether uninsured subs end up on your payroll at all. In an expensive state especially, that’s the highest-leverage thing to get right. Check your subs’ coverage free →

State factors are from the Oregon DCBS 2024 Premium Rate Ranking study; figures are planning estimates, not quotes. Your actual rate is set by your state bureau, carrier, and experience mod.