How to Prepare for a Workers’ Comp Audit in Florida

If you run a contracting business in Florida with employees \u2014 or subcontractors \u2014 you will face a workers\u2019 compensation audit. It happens every year, at the end of your policy period, and it can result in a bill for thousands of dollars in additional premium. Or, if you are prepared, it can result in a refund.

The difference between those two outcomes almost always comes down to preparation. Here is exactly what you need to know and do before your Florida workers\u2019 comp auditor shows up.

What Is a Workers\u2019 Comp Audit in Florida?

When your workers\u2019 compensation policy is written, your insurance carrier estimates your payroll for the coming year. Your premium is calculated based on that estimate. At the end of the policy year, the carrier audits your actual payroll to see how close the estimate was.

If your actual payroll was higher than estimated, you owe additional premium. If it was lower, you get a refund. The audit also verifies that your employees are classified into the correct class codes \u2014 because different job types carry different premium rates.

Step 1: Gather Your Payroll Records

The foundation of any workers\u2019 comp audit is your payroll records. You will need quarterly 941 federal payroll tax returns, state unemployment (SUTA/reemployment tax) filings, W-2 forms for all employees, payroll journals organized by employee and job classification, and records of overtime, bonuses, and tips paid.

Make sure your payroll records are organized by employee and by job classification. If an employee performs multiple types of work, their payroll should be segregated by the time spent in each role \u2014 otherwise, the auditor will assign all of their payroll to the highest-rate class code.

Step 2: Collect Certificates of Insurance for All Subcontractors

This is the single most important step for Florida contractors, and the most commonly missed. If you hired any subcontractors during the policy period, you need a current Certificate of Insurance (COI) for each one showing they carried their own workers\u2019 compensation coverage.

Without a valid COI, the auditor will include your subcontractors\u2019 payroll in your audit \u2014 meaning you pay their workers\u2019 comp premium. For a roofing contractor with multiple subs, this can add $10,000\u2013$50,000 or more to your audit bill.

Step 3: Review Your NCCI Class Codes

Workers\u2019 comp class codes are assigned by the National Council on Compensation Insurance (NCCI) and determine the rate you pay per $100 of payroll. Common Florida contractor class codes include 8810 (Clerical \u2014 very low rate), 5551 (Roofing \u2014 one of the highest rates in Florida), 5645 (Carpentry \u2014 moderate rate), and 0042 (Landscaping \u2014 moderate rate). Review every employee\u2019s classification before the audit and gather documentation of actual job duties to support any reclassification.

Step 4: Identify Excluded Payroll Items

Not all payroll is auditable. Florida workers\u2019 comp rules allow you to exclude the overtime premium portion of overtime pay, employer contributions to qualified benefit plans, and documented expense reimbursements. Make sure your payroll records clearly separate these excluded items.

Step 5: Know Your Right to Dispute

You have the right to dispute a workers\u2019 comp audit bill in Florida. Common grounds include incorrect class code assignments, failure to credit valid subcontractor COIs, inclusion of excluded payroll items, and mathematical errors. You typically have 30\u201390 days from the audit bill date to file a dispute \u2014 act quickly.

Audit Monkey specializes in workers\u2019 comp audit preparation and dispute for Florida contractors. We have recovered over $10M in overcharges for Florida roofers, GCs, landscapers, and other contractors. Contact us for a free review.