It’s important to keep employment status in mind in advance of an audit, particularly if your business utilizes independent contractors or subcontractors. Remember, the amount of premium we charge depends greatly on how much employee payroll you have. During an audit, we will look at the employment status of all individuals to whom you made payments.

Payments Reported on Form 1099

Payments you make to uninsured and/or unlicensed workers that you report on IRS Form 1099 may be subject to premium and may be included in the audit as payroll. We determine this on a case-by-case basis. Our auditors may require additional information to assist in making this determination.

For example, if you are in the trucking industry, our auditor may ask you to provide the following additional information for drivers who are not on your regular payroll:

  • List of payments made to drivers
  • USDOT/MCP for drivers
  • DMV Registration for ALL drivers paid/CAB Card
  • Verification of the number of trucks owned by insured
  • Lease agreement for drivers

Audits For Construction Classifications

ALL subcontractors are required to have a valid contractor license. Unlicensed individuals who perform work requiring a contractor license are employees for workers’ compensation purposes. You should obtain a certificate of workers' compensation insurance from all subcontractors who have employees of their own.

If you are unable to provide a certificate of insurance from a subcontractor at the time of audit and the subcontractor does not have a valid license, we may consider the subcontractor an employee for workers’ compensation purposes, and will charge the appropriate premium.

Reference Material

Visit our premium audit page for more information and reference material about our premium audit process and how to prepare for an audit.