Business risk • November 4, 2026
By Michael J. Fusco, Legacy Wise Advisors
A workers comp premium audit bill arrives, it's thousands more than you expected, and it reads like a verdict. It isn't one. It's a calculation — built from your payroll records, your class codes, and documents you did or didn't hand the auditor. Calculations can be wrong, and audit calculations are wrong in predictable places. Before you pay, check these five. A workers comp premium audit review starts with exactly these errors, in this order.
The 5 errors to check:
1. Class-code misclassification. Your premium is payroll multiplied by a rate, and the rate depends on what each employee actually does. The classic error: employees who split their time between field work and clerical or sales duties get their entire payroll charged at the higher field rate — especially where nobody kept records separating the two. If your timesheets and job descriptions don't separate the duties, the auditor isn't required to guess in your favor.
2. Subcontractor payroll pulled in for missing certificates. If you hired subcontractors and can't produce a certificate of insurance for each one, the auditor can treat their pay as your payroll and charge you premium on it. This is the single biggest shock item on contractor audits — and it's often a paperwork problem, not a coverage problem. COIs collected after the fact can change the number; COIs never collected are an argument you may lose.
3. The overtime premium portion not excluded. Overtime pay includes a premium portion — the extra half in time-and-a-half. In New York, that premium portion is generally excludable from reportable payroll when your records separate it. If your payroll reports show only gross overtime totals, the whole amount may have been charged as straight-time payroll.
4. An experience mod that doesn't match your policy — or is built on bad data. Your experience modification factor is calculated from a worksheet of your prior claims. Check that the mod on the audit matches the mod on the policy, and that the underlying claims are actually yours, current, and not duplicated. A stale or wrong claim sitting in the worksheet raises the mod, and the raised mod multiplies everything else on the bill.
5. Excluded pay counted as payroll. Some pay is not reportable — tips, severance pay, and certain expense reimbursements, among others. If those amounts ran through the same payroll totals you handed the auditor without being identified, they may have been charged premium as if they were wages.
What to pull together before you respond:
- Payroll reports for the full policy period, by employee
- Quarterly filings — federal 941s and New York NYS-45s
- Every subcontractor's certificate of insurance
- Written job descriptions, especially for anyone who splits field and office work
- Your experience mod worksheet
Then put the dispute in writing, with the documentation attached, and do it fast — audit disputes run on carrier deadlines, and the file you build is the argument. This is also why clean payroll records matter all year, not just at audit time; the same document set drives your January 1 bookkeeping and payroll setup.
The bottom line
Don't pay an audit bill you can't reconcile, and don't ignore it either — unpaid audit balances don't age well. Check the five errors, build the file, and dispute what's wrong in writing. If the bill doesn't survive that checklist, a full commercial insurance review will show you where it broke.
General education only — not advice for any specific situation, and not a promise that any particular audit is wrong. Whether an audit can be corrected depends on your policy, your records, and your carrier's dispute process and deadlines.
Legacy Wise Advisors provides insurance and risk consulting; placements are handled through Fusco Insurance. To request a workers comp premium audit review, contact (929) 244-0744 or michael@legacywiseadvisors.com.