Pen-and-ink street scene: a plumbing van with its back doors open and pipe on the roof rack outside a house, a commercial building in scaffolding with exposed pipe across the road.

Workers’ comp audit for plumbers

got an audit
letter? here’s
how to be ready.

What the auditor checks, and the records that keep it small.

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MARKETS WE PLACE THROUGH

the short answer

Workers’ comp is priced on estimated payroll, so after the policy year ends the carrier audits your actual payroll by class code and adjusts the premium up or down. A bill usually means payroll ran higher than the estimate, or a sub without a certificate was counted as your employee.

what the auditor checks.

The common treatment under the rating rules most states use. Your state and your policy control.

Wages, salaries and bonuses: Counted.
Overtime: The straight-time part counts. The extra half of time and a half is excluded in most states, but only if your records show it separately.
Owners and officers: Depends on the election on your policy and your state. Often capped, or excluded by election.
Subs with a certificate: Left out, when the certificate is dated inside your policy period and the name matches the invoice.
Subs without a certificate: Commonly added to your payroll at the class of the work they did.
Class codes: Each employee’s payroll is assigned to a code. Field plumbing, clerical and outside sales carry different rates.

Sources: workers’ compensation rating rules used in most states, standard workers’ compensation policy terms, Riza plumbing coverage review. Last reviewed September 2026.

tap a record.

What to gather before the request comes, and why the auditor wants it.

The record

payroll by class.

Payroll by employee and class code for the policy period, with overtime on its own line.

Who asks: The auditor assigns each dollar to a code from it.

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how the audit
plays out.

It starts with a guess.
The deposit premium is built on the payroll you estimate at the start. Update it mid term when you hire, and the audit stays small.
Then a bill or a refund.
Audited premium minus the deposit. Higher means a bill, lower means money back, often months into the next policy year.
Disputes run on paper.
Carriers correct documented errors: wrong class codes, a certificate that was on file, overtime not broken out.

good to know.

Straight answers on the workers’ comp audit.

What happens at a workers’ comp audit?

The carrier compares the payroll and class codes you estimated at the start with what actually happened. You send payroll by employee and class, wage filings, and a list of subs with their certificates. The auditor assigns payroll to codes, checks every sub, and recalculates the premium. Higher means a bill after the policy ends. Lower means money back.

Do subcontractors count on my workers’ comp audit?

They can, and for plumbing shops it’s the most common surprise. Under the rules most states use, a sub who can’t show a workers’ comp certificate for the time they worked is commonly treated as your employee, and their pay is added at the class of their work. A sub with a certificate dated inside your policy period is left out. Collect it before they start.

Does overtime count as payroll?

The straight time part counts everywhere. The extra half in time and a half is excluded in most states, but only when your payroll records show it separately. If overtime is one lump sum, the whole amount is counted, because the auditor can’t split what the records don’t. A few states and some policy forms treat it differently, so check yours.

Sources: workers’ compensation rating rules used in most states, standard workers’ compensation policy terms, Riza plumbing coverage review. Last reviewed September 2026.

Insurance words, in plain English: waiver of subrogation · certificate of insurance · additional insured · primary and noncontributory · hold harmless agreement · contractual liability · per-project aggregate · completed operations