Workers Comp Audit
Your premium is decided by records, not by your safety record
For a labor-heavy contractor the comp premium is often a larger controllable expense than income tax, and almost none of it is decided by strategy. It is decided by records. Two contractors with the same crew, the same claims history and the same class codes can pay very differently, and the difference is what each one can produce at audit.
Where it goes wrong
Workers comp audit support
A sub who cannot produce a certificate becomes your payroll
If coverage cannot be evidenced across the exact dates the work was performed, those payments are added to your exposure at the applicable construction class code. The failure is almost never that the sub was uninsured. It is that the certificate expired mid-project, named the wrong entity, or was never re-collected on the second phase.
Invoices that do not split labor and material cost you the deduction
For uninsured subs, actual material cost up to a capped proportion comes out of the exposure, but only where the original invoice states material and labor separately. Where it does not, the full contract amount is charged. That is accounts payable discipline, and it is worth a large share of the exposure on every undocumented sub.
Crews on one code when their hours belong on several
Employees performing multiple job functions can have payroll allocated across classification codes, some carrying materially lower rates. It requires actual records of hours and work performed, because estimated or percentage allocation is not accepted. A contractor already coding labor to jobs can produce that. A contractor who is not, cannot, at any price.
Overtime premium included because nobody separated it
The extra portion of overtime pay is excluded from the premium base under standard rules, but only where payroll separates overtime from regular wages by employee and by classification. It routinely gets included at audit simply because the business cannot produce the split. A small number of states do not permit the exclusion at all, so it is worth confirming yours before counting on it.
The audit is a scheduled event you can only prepare for in advance
Chasing a W-9 or a lapsed certificate nine months after the work is very hard, and the auditor does not care that the paperwork is coming. The records either support the exclusion or they do not, and that is settled long before anyone arrives.
What this covers
What arrives, and when
- Certificates collected at onboarding and tested against the service dates on every invoice, not just held on file
- Expiry monitored continuously, with renewal chased ahead of the lapse rather than discovered after it
- Subcontractor invoices required to state labor and material separately, and returned before entry when they do not
- Subcontractor payments coded by coverage status, so insured and uninsured are presented separately rather than as one balance
- Payroll summarized by classification code with the supporting hour detail behind it
- Overtime separated by employee and by class each period, reported as it happens rather than reconstructed at year end
- Officer and excluded compensation categories flagged at the payroll item level against the current cap for your state
- The full audit package assembled ahead of policy expiry, including an exception log naming any known gap and its cause
This sits inside one engagement rather than being sold as a line item. What it costs depends on your contract volume, your entity and payroll-state count, and how much of the compliance substrate sits with us. We scope it against your numbers and put it in writing before you commit.
How the engagement worksQuestions
What contractors ask about this
Does this reduce my workers comp premium?
We do not place coverage, advise on it, or promise a lower premium, and anyone who does should be treated carefully. What we do is produce the records that determine how the premium is calculated: evidence for every exclusion you are entitled to, and no exposure added that does not belong to you. Whether that changes your number depends on what your records look like today.
My subs are all insured. Is there anything here for me?
Probably, and it is a different question from the one asked at audit. Can you produce a valid certificate for every sub you paid this year, covering the exact dates each of them worked? Coverage that lapsed in month four counts as uninsured for the rest of the year, and that is where most of the exposure actually comes from.
My insurance agent handles this.
Your agent sells the policy and may help dispute a result after the fact. He does not see your accounts payable file, he does not code your payroll, and he is not building records twelve months before the audit. The two roles do not overlap, and this work happens long before anything reaches him.
What makes this different from compliance software?
Software tracks and reminds, and it sits outside the payment process, so the contractor still has to act on the reminder. We run your accounts payable, which means documentation can be a condition of the check rather than a notification somebody dismisses. No software vendor can make that claim, because none of them touch the payment.
We are mid-policy. Is it too late?
Not for the rest of the period, and that is usually worth having. What has already lapsed cannot be recreated honestly, so we document it as an exception rather than paper over it. Presenting a known gap with an explanation produces better outcomes at audit than letting the auditor find it.
The rest of the engagement
This does not work on its own
WIP reporting and bonding capacity
Work-in-progress schedules, over- and under-billing analysis, and bonding capacity support for commercial contractors. Presented the way a surety underwriter reads it.
Subcontractor and payroll compliance
Certified payroll, prevailing wage, lien waivers, insurance certificates, 1099s, and worker classification review for commercial construction contractors.
CFO advisory for contractors
Cash forecasting on draws and retainage, contract margin against estimate, and decision modeling for commercial construction contractors. Advisory that comes out of running the function.
Construction tax strategy
Revenue recognition method election, look-back, equipment timing, entity structure, and multi-state exposure for commercial construction contractors.
Find out what your position actually looks like
Bring your current schedule and your last two years of statements. We will tell you what a surety sees, what is holding your capacity down, and what the work to fix it looks like.
Talk through your position