How to Dispute a Workers' Comp Audit (And Win)

1. Get a copy of the audit worksheet

When you receive an audit bill, request the auditor's full worksheet. By law (in most states) the carrier must provide the calculations behind the additional premium. The worksheet should show payroll by class code, the rate applied, any experience modification, and any minimum-premium adjustments.

If the carrier won't provide the worksheet within 30 days, file a complaint with your state's Department of Insurance — that alone often resolves the dispute.

2. Reconcile against your own payroll records

Pull your 941s, state UI returns, and 1099s for the policy period. Compare the auditor's reported payroll to your actual payroll. Common errors: overtime counted at 1.5x instead of 1x (most class codes only count straight-time), bonuses double-counted, severance/termination pay included (usually excluded), tips included in non-tipped roles.

Federal overtime should be counted at the regular hourly rate, not the time-and-a-half rate, for workers' comp purposes.

3. Verify class code assignments

The auditor may have applied a higher-rate code to your entire payroll instead of properly splitting employees by job function. For example, if your office staff is coded the same as your field crew, that's wrong — clerical (8810) is one of the lowest rates while field crew might be 5645 or 5403 (much higher).

Drivers, salespeople, and outside collectors usually have their own codes (7380, 8742, etc.) and should be split out.

4. Subcontractors and 1099s

If a subcontractor had their own workers' comp coverage in force during the policy period, you should NOT be charged on their payroll. Get a copy of each sub's COI showing their policy was active when they worked for you, and provide it to the carrier.

If a sub was uninsured, you can be charged — but only on the labor portion of their work, not materials. If the auditor charged you on the gross invoice (labor + materials), challenge it.

5. File a written dispute

Send a formal written dispute to the carrier within the timeframe specified in your policy (usually 60-90 days from the audit notice). Include: the disputed amount, line-item breakdown of what you're disputing, supporting documents (corrected payroll, COIs, etc.), and a request for a re-audit.

Also copy your state's Workers' Compensation rating bureau (NCCI, NYCIRB, WCIRB, etc.) — they have an Independent Bureau Review process that's free and binding on the carrier.

6. Get a free expert review

Audit dispute success rates are high when handled by an experienced agent. We do free policy and audit reviews — submit your audit and we'll identify what's disputable, file the challenge with the carrier, and re-write your policy at the correct classifications. Most clients we help save thousands on the disputed audit and reduce future premium too.