Resource · Workers' Compensation
California Workers' Comp Audit Checklist.
Every California workers' comp policy ends with an audit that reconciles your estimated payroll against actual. Get it wrong and you owe a surprise bill — or you overpay and never know. Here's how to walk in prepared.
What the auditor checks
What a workers' comp audit actually reviews
The audit verifies the payroll and classifications your premium was based on. Auditors reconcile your estimated figures against actual records and re-examine how each employee is classified. The two things that move your bill the most are payroll totals and class codes.
- Gross payroll by employee and by class code
- Overtime (often excludable down to straight-time in California — don't overpay)
- Officer/owner inclusions and exclusions
- Subcontractor and 1099 payments (uninsured subs can be charged to you)
- Certificates of insurance for every sub you paid
- Cash disbursements and 1099 totals tied to your tax records
Documents to have ready
Bring these to the audit
- Quarterly payroll tax returns (DE-9 / DE-9C) for the policy period
- Federal 941s and the prior year W-3/W-2 summary
- A payroll register broken out by class code
- Overtime report (so OT can be reduced to straight-time where allowed)
- 1099 / subcontractor ledger with amounts paid
- Certificates of insurance for each subcontractor
- General ledger or cash disbursements journal
- A list of job duties for any employee whose class code is unclear
Where premiums go wrong
The mistakes that inflate your premium
Misclassification is the number-one cause of premium surprises — a single employee in the wrong class code can swing your bill significantly. Uninsured subcontractors get charged to your policy if you can't produce their certificates. And overtime that wasn't reduced to straight-time quietly pads your audited payroll. We review every audit on policies we manage, and dispute the carrier's numbers when they're wrong.
Questions
Workers' Comp Audit Checklist FAQ
Do I have to let the auditor in?
The audit is a condition of your policy. Refusing or stalling typically triggers an estimated audit that assumes the worst and bills accordingly. It's far better to prepare and cooperate.
Can overtime be excluded?
In California, the premium portion of overtime can usually be reduced to the straight-time equivalent — but only if your records separate it clearly. If overtime is buried in gross wages, you may be charged on the full amount.
What if the subcontractor had no insurance?
Payments to uninsured subcontractors are generally added to your payroll and charged at the appropriate class rate. Collecting a valid certificate of insurance before you pay a sub is the cleanest way to avoid this.
Can you dispute an audit result?
Yes. Errors aren't rare — misapplied class codes, double-counted payroll, or subs charged despite valid certificates. On policies we manage, we review the audit worksheet before you sign and dispute mistakes with the carrier.
Ready when you are
Talk to a licensed California broker.
Same-day quotes are often available for standard accounts. No spam, no obligation — we shop multiple carriers to compare your options.