How to Prepare for (and Survive) a Workers’ Comp Premium Audit
A Premium Audit Reconciles Your Estimated Payroll With Reality
Your workers’ comp premium starts as an estimate based on projected payroll and class codes. At the end of the term, the carrier audits actual payroll to set the final premium. For manufacturers, errors in this process are common and can cost real money, so preparation pays off.
What the Auditor Looks At
- Actual payroll by employee and by classification
- How job duties map to class codes
- Subcontractor and certificate-of-insurance records
- Overtime, bonuses, and how they’re counted
- Owner or officer payroll treatment
Where Manufacturers Get Overcharged
- Employees lumped into a higher-rated class code than their actual duties warrant
- Overtime not adjusted correctly where rules allow
- Subcontractors counted as payroll because their insurance wasn’t documented
- Clerical or supervisory roles not separated from production codes
How to Prepare
- Keep clean payroll records broken out by role and class code
- Collect certificates of insurance from every subcontractor
- Separate overtime so it can be handled correctly
- Review last year’s audit for errors before this year’s begins
You Can Dispute an Audit
If an audit looks wrong, you can usually request a review or dispute it. Accurate records are what make that possible, which is why preparation matters before the auditor arrives.
Want Help Reviewing an Audit?
If your premium jumped after an audit, or you want to prepare for the next one, a review can check your class codes and records for costly errors.
