Read time 4 mins / SIA Group / An NC workers comp audit reconciles estimated payroll with actual payroll. Learn why premiums change in North Carolina and how businesses can prepare.
Why Did My Workers Comp Premium Increase
That is the question many North Carolina business owners ask when an audit bill arrives.
The assumption is simple:
“We already paid our premium.”
But workers compensation insurance does not work like most other policies. Your initial premium is based on projected payroll. An NC workers comp audit compares that estimate to what actually happened during the year.
If payroll increased, classifications changed, or subcontractor documentation was missing, the premium adjusts.
Understanding that process is the first step. Managing it is the second.
How an NC Workers Comp Audit Works
At the beginning of the policy term, the carrier estimates payroll based on your projection.
At the end of the term, the carrier reviews:
- Actual payroll totals
- Job classifications
- Overtime records
- Subcontractor payments
- Officer compensation
The audit reconciles estimated exposure with actual exposure.
If your business grew, your exposure grew. If payroll shifted into higher risk classifications, your rate structure changed.
The North Carolina Industrial Commission oversees workers compensation administration in the state, and carriers follow structured rating rules during audits.
https://www.ic.nc.gov
The process is standardized. The surprises are not.
Where Most Audit Surprises Come From
Most significant audit adjustments in North Carolina stem from operational changes, not accounting errors.
Payroll Growth
If you hired more employees, expanded crews, or increased wages, your payroll likely exceeded the original estimate.
Growth is positive. But it increases exposure.
Classification Shifts
Workers compensation rates depend on job classifications. Clerical employees are rated differently than field employees. Supervisors who perform manual labor may not qualify for office classifications.
If payroll was assigned to a lower risk classification during the year but does not meet that definition at audit, the premium will adjust.
Subcontractor Documentation
In construction and trade industries across North Carolina, subcontractor certificates are critical.
If you cannot provide proof that a subcontractor carried workers compensation coverage, the carrier may include that cost as payroll in your audit.
That single issue can significantly change the final premium.
The Question Behind the Question
Most business owners are not asking how the audit works.
They are asking:
“How do we prevent this from happening again?”
That is where action comes in.
What North Carolina Businesses Can Do Now
You cannot eliminate an NC workers comp audit. It is built into the system.
But you can reduce volatility.
1. Track Payroll by Classification All Year
Do not wait until audit time. Separate clerical, field, supervisory, and specialty payroll throughout the year.
Clarity early prevents disputes later.
2. Review Class Codes Annually
As operations evolve, classifications should evolve too.
If your company expands into new services or shifts job responsibilities, review how those roles are rated before the audit.
3. Maintain Current Subcontractor Certificates
Keep documentation organized and updated. Missing certificates are one of the most common drivers of audit increases in North Carolina.
4. Communicate Operational Changes
When your business grows, restructures, or adds new scopes of work, that information should not wait until renewal.
Insurance premiums reflect exposure. Exposure changes when operations change.
Why This Matters Now
North Carolina businesses are expanding across construction, manufacturing, logistics, and healthcare. Growth changes payroll quickly.
An NC workers comp audit is not designed to create penalties. It reconciles projected exposure with actual exposure.
When business owners understand the mechanics, they move from reacting to managing.
That shift changes the outcome.