Your workers’ compensation audit is complete, and the final report is in your hands. What comes next?
Here’s how to understand the results, handle disputes if necessary, and set your business up for smoother audits in the future.

Understanding Your Audit Report

The report will show your:

• Final premium adjustment amount

• Adjusted payroll totals and classifications

• Breakdown of any differences between your reported and actual data

If your premium increased, the most common reasons include:

• Underreported payroll

• Misclassified employees

• Unreported contractor exposure — This area often causes confusion. While payments to vendors and contractors do not appear on payroll reports, auditors will usually request disclosure of these amounts. If you cannot provide certificates of insurance (COIs) showing workers’ compensation coverage for the vendor during their engagement, the auditor may assign those costs to your policy. The result is an additional premium based on the contractor’s work type and contract value.

What to Do If You Disagree

If something looks incorrect, there is a formal process to dispute audit results. Steps include:

• Responding before the stated deadline on the audit notice

• Providing detailed documentation that supports your position

• Clarifying contractor classifications and COI details — In some cases, this may mean requesting that vendors provide retroactive COIs showing coverage for the period of their engagement.

The sooner you review and respond, the better your chances of a fair adjustment.

Correcting Issues for the Future

• Adjust how your payroll is tracked throughout the year

• Make sure employee job duties and classifications are clearly documented

• Implement a consistent COI collection and tracking process for all subcontractors and 1099 contractors

• Review your onboarding processes to capture necessary documentation up front

Strategic Takeaways

Audits are recurring events. The best way to manage them is by building systems that keep your business audit-ready all year long.

• Build a consistent process for collecting and updating COIs

• Maintain clear payroll records by class code

• Designate a compliance lead or audit coordinator internally

• Consider pre-audit consultations with your broker or carrier if you have a complex workforce

Final Checklist: Building an Audit-Ready Compliance Process

• Payroll tracking aligned with policy class codes

• Contractor COI verification embedded in onboarding

• Consistent recordkeeping and secure storage

• Internal workflows with clear ownership that do not rely on a single individual

By staying organized all year, you reduce surprises, minimize premium adjustments, and protect your business from unnecessary costs.

To learn how 1099Policy can help automate contractor compliance and COI tracking, visit 1099Policy.com.

Photo by Andrea Sun on Unsplash