What should a California contractor prepare for a Workers' Compensation review?

Prepare the business name, license or trade information, employee and payroll details, operations, vehicles or equipment when relevant, contracts, prior coverage, and claims history. A licensed team member can then review the request subject to carrier eligibility, policy terms, and underwriting.

How are Workers' Compensation limits or terms selected for a contractor?

Limits and terms are not universal. They can be influenced by the contractor's actual work, contracts, employee duties, vehicle use, project requirements, prior loss history, carrier guidelines, and applicable California requirements. The appropriate structure must be reviewed for the individual operation.

Can Asena provide an exact price or guarantee coverage for this page?

No. Any indication is preliminary until complete information is reviewed. Availability, pricing, limits, effective dates, certificates, and coverage are subject to carrier eligibility, policy terms, underwriting, and written confirmation.

Workers Comp Payroll Audit: What California Contractors Need to Know

## Workers Comp Payroll Audit: What California Contractors Need to Know At the end of every workers comp policy year, your carrier conducts a payroll audit to reconcile your actual payroll against the estimate you provided when the policy started. This audit determines whether you owe additional premium or get a refund. ### Why Audits Happen Workers comp premiums are calculated based on estimated payroll at the start of the policy. If your actual payroll was higher than estimated, you owe more premium. If it was lower, you get a refund or credit. ### What the Auditor Looks For A workers comp auditor will typically request: - **Payroll records** — quarterly payroll tax returns (DE 9/DE 9C), W-2s, 1099s - **Certificates of insurance** from subcontractors - **Contracts** for major projects - **Job descriptions** for employees ### The Subcontractor Trap This is where many California contractors get surprised. If you use subcontractors who: - Are not licensed - Do not have their own workers comp policy - Cannot provide a valid COI ...your carrier may include their labor costs in your payroll, dramatically increasing your audit bill. Always collect COIs from every subcontractor before they start work. ### How to Prepare for a Workers Comp Audit 1. **Keep organized payroll records** throughout the year 2. **Collect COIs from all subcontractors** and keep them on file 3. **Classify employees correctly** — a project manager is not a field laborer 4. **Track overtime separately** — overtime premiums are generally excluded from WC payroll calculations 5. **Document owner exclusions** — if you are an owner excluded from coverage, document this properly ### Avoiding a Surprise Audit Bill The Appropriate way to avoid a large audit bill is to use **pay-as-you-go workers comp**, which adjusts your premium each pay period based on actual payroll. This eliminates the year-end reconciliation surprise. ### Get Help with Your Workers Comp Asena Capital Insurance Services helps California contractors navigate the audit process and find carriers with the most favorable audit procedures. **Call (858) 925-9555** or [get a quote online](/get-workers-comp-quote).