A workers comp premium audit compares the payroll on your policy estimate with the payroll you ended up paying, class by class, and the carrier then refunds or bills the difference. To dispute a result, start in writing with the carrier and your records; California also gives policyholders a formal complaint and appeal path.
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A workers comp policy is priced on payroll you have not paid yet. The carrier sets a deposit premium from your estimate for each classification, and after the term an auditor sorts what you actually paid into the same classifications and reruns the math. Lower payroll may bring a credit; higher payroll, or payroll that moved to a higher-rated classification, typically brings an additional bill.
Some carriers send a questionnaire, some schedule a call and larger accounts may get a field visit. The questions are much the same: who you paid, how much, for what work and in which state. The bill that follows is the carrier's reading of your records, and readings can be wrong.
| State | Rule | What It Can Change at Audit | Source |
|---|---|---|---|
| California | Wage-split construction classifications | For policies from September 1, 2026, each person's regular hourly wage decides which of the two published classifications applies. | WCIRB |
| California | Unlicensed workers on licensed work | A worker doing work that needs a contractor license, without holding one, is presumed to be an employee. | Labor Code 2750.5 |
| Arizona | Alleged statutory employees | The carrier may not charge premium for alleged statutory employees until it first gives written audit findings. | Arizona Revised Statutes 23-961 |
| Arizona | Statutory employer | A sub's workers can count as the hiring contractor's employees when it keeps supervision or control and the work is part of its trade. | Arizona Revised Statutes 23-902 |
| Nevada | Payroll limit per employee | For policies from October 1, 2026 to December 31, 2026, payroll counts up to $98,433.60 per employee; from January 1, 2027, up to $102,452.16. | Nevada Division of Insurance |
In California, the wage split and the overtime rule are where construction audits most often move money, and Labor Code 2750.5 is why an unlicensed helper paid by 1099 can still show up as payroll. The California workers comp for contractors and restaurants page covers licenses and exemptions.
In Arizona, the useful protection is the step in Arizona Revised Statutes 23-961: before premium is charged on workers the carrier calls your statutory employees, it has to give written audit findings. Ask for them if a bill shows those charges without them.
In Nevada, where the coverage is called industrial insurance, the per-employee limit now follows a wage-based formula instead of the old fixed cap of $36,000. Check that the audit used the limit matching your policy dates, especially on a term that ran across October 1, 2026.
California. The Department of Insurance says a policyholder disputing a classification assignment or experience modification must first send a written Complaint and Request for Action to its insurance company, or to the WCIRB when the WCIRB's own decision is the issue, and must get a written answer. An adverse decision may then be appealed to the Insurance Commissioner through the Administrative Hearing Bureau, on the Workers' Compensation Insurance Policy Appeal form, under Insurance Code 11737. Deadlines run from the written decision, so read the current ones on the department's appeal page before you file.
Arizona. Beyond the written audit findings required before premium on alleged statutory employees, this guide did not confirm a separate state appeal process. Put your dispute to the carrier in writing, and ask the carrier or the state insurance department which review applies.
Nevada. This guide did not confirm a state appeal process for audit bills. Write to the carrier with your records, and ask the carrier or the Nevada Division of Insurance how a disputed audit is reviewed.
Letting the Audit Request Sit
An audit letter that goes unanswered rarely helps. When records don't arrive, a carrier may estimate payroll on its own terms, and an estimate built without your certificates and hourly records tends to run high. Answering on time, with organized records, is usually the cheapest way through an audit.
The audit is one of several topics in the workers comp guides for contractors and restaurants. To get ready before the auditor calls, print printable workers comp audit checklist.
Send your trade, state and payroll, and a broker reviews the request. If you would rather talk first, leave a number.
Swipe or use the arrows for every answer.
Usually because the payroll you paid was higher than the estimate on the policy, or because some payroll landed in a classification with a higher rate than you expected. Payments to subcontractors without proof of their own coverage can also be added. Ask the carrier for the audit worksheet so you can see which lines changed.
Yes. Start by writing to the carrier with your records. For a disagreement over classification or an experience modification, the Department of Insurance says the first formal step is a written Complaint and Request for Action to the insurer, and an adverse written decision may then be appealed to the Insurance Commissioner through the Administrative Hearing Bureau.
Send the carrier a certificate for each sub showing workers comp in force on the dates they worked for you, plus their license numbers. In California, an unlicensed sub on licensed work is presumed to be an employee, so a certificate may not settle it alone. In Arizona, ask for the written audit findings the law requires before premium on alleged statutory employees.
Payroll for each employee counts only up to the limit for your policy dates: $98,433.60 for policies from October 1, 2026 to December 31, 2026, and $102,452.16 from January 1, 2027. Owners and officers follow separate payroll rules. Check that the worksheet applied the limit person by person.
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Reviewed by David Gleason, Principal, on .
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Premium audits read clearly, and disputed in writing when the numbers are wrong.
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