Every Florida workers' comp policy is audited annually. Here's how audits work, what can go wrong, and how pay-as-you-go eliminates the risk entirely.
Florida law requires all workers' comp carriers to audit every policy at the end of the policy year. Here's the process step by step.
You estimate your annual payroll by class code. The carrier sets your deposit premium based on this estimate.
You pay monthly or quarterly premiums based on the estimate. Your actual payroll may differ significantly.
At year-end, the carrier requests payroll records, tax documents, and subcontractor COIs. You have 30 days to respond.
If actual payroll > estimate: you owe more. If actual < estimate: you get a refund. The difference can be substantial.
If a subcontractor can't provide a valid certificate of insurance, their payroll is added to your policy. A $100,000 roofing subcontractor without a COI adds $6,752 to your premium (5551 rate: $6.752/$100).
Putting a roofer on the books as a clerical worker (8810, $0.105/$100) instead of roofing (5551, $6.752/$100) is a common audit finding. The difference is $6.647 per $100 of payroll.
If you estimated $300K in payroll but ran $500K, you owe premium on the $200K difference. For roofing, that's $13,504 in additional premium due at audit.
Florida requires overtime wages to be included in the payroll base for WC premium calculations. Many employers incorrectly exclude overtime.
Adding a new service line mid-year (e.g., a plumber adding roofing work) without notifying your carrier can result in a large audit bill if the new work carries a higher rate.
Pay-as-you-go workers' comp calculates your premium from actual payroll each pay period — not an annual estimate. There's no year-end audit because you've already paid the correct premium in real time.
Premiums are reconciled every pay period. No year-end surprise bills.
Pay exactly what you owe based on who actually worked and what they earned.
No upfront deposit based on estimated payroll. Pay as you run payroll.
Switch to pay-as-you-go workers' comp and pay only for the payroll you run — no estimates, no audits, no surprises.
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