Beat Your Workers' Comp Auditor at Their Own Game

Beat Your Workers' Comp Auditor at Their Own Game

February 06, 2023

Have you ever gotten a great big bill after tying up an audit?  I bet it was a surprise. Auditors get in and get out. They pick up the required information and away they go. No explanations and here’s the thing, they are not there to help you. They’re working a numbers game and the more audits completed the better they do. So, let’s stack the deck. 

Key Take Aways 


Keep accurate and details records including payroll breakouts.

Vet your sub-contractors and collect proof of insurance up front.

Getting your pins set up right in the beginning will help ensure they fall as expected every time.   


How do we set up the field:  

Employee Payroll: Basic payroll 

Don’t lump it all together. Keep types of compensation separate. Over time is not considered the same as regular pay on audits. It usually taken at a third, make sure it is broken out and keep separate form regular pay.  At a minimum keep regular payroll, reimbursements and overtime categories for each employee.

Knowing our employees' job description 

Keep a good job description.  If you have an employee that is relegated on specific job it can keep them from being classified to into a higher rated and more expensive class.  If an adjustor tries to reclassify employees, it will give you a quick and easy way to settle any disputes. 

Understanding your class codes 

When you have employees that do more than one task it is likely they will be placed in the highest treated class. Review your class codes and understand what is contemplated in the work.  Review your job descriptions with your agent wo you know what classification will apply. 

Tracking payroll by states 

 If you work in multiple states keep records of jobs and the payroll in those states.  Rates can vary between states and you could rick all the payroll being placed in a more expensive state.  

Lock down your 1099 Sub-contractors 

A 1099 form is used to report self-employed income.  It does not automatically make someone a subcontractor just because they are paid on a 1099.  True sub-contractors have their own insurance.  Get a certificate of liability up front, use a sub-contractor agreement and a copy of their business license.  Do this before any work is done.  It can be nearly impossible to do it after the fact.   

Officers of a corporation can be excluded in most states and be excluded form coverage on the policy.  Even if your offices are not included on payroll they will be picked up a minimum payroll for officer unless you elect to exclude them.  Make sure you’ve discussed your officers with agent and necessary exclusions forms. 

With a little luck your audit will come out exactly as expected.  In the event a dispute is necessary it can be settled quickly with information right at your fingertips.