Who did the work?
Identify the subcontractor, job location, dates, contract, and people performing the work.
The general contractor’s audit field guideThe job is finished.
The job is finished.
Is your audit file?
When a subcontractor’s coverage or labor records are missing, the audit conversation can change. Know what to collect before the next job closes.
Subcontractor records and your audit
See how documentation changes the illustrated payroll basis, then prepare your file and request your Ex-Mod worksheet.
Presented by Cassie, an AI presenter. State and policy rules require professional review.
Read the video transcript
You hired a subcontractor to keep the job moving. Now the workers' comp audit is asking how those payments should be treated.
Start with the records: the agreement, evidence of coverage, the work performed, and complete actual payroll records where available and applicable.
A percentage is not an automatic discount. Under the applicable North Carolina subcontractor rule illustrated in this guide, missing records or no defensible labor split can mean using the full contract amount.
One-third, fifty percent, and ninety percent are conditional minimums for different contract types. You cannot choose whichever percentage produces the lowest number.
Here's a labor-plus-materials illustration when that rule applies and complete actual payroll isn't available. On a one-hundred-thousand-dollar contract, forty thousand dollars of documented labor rises to the fifty-thousand-dollar minimum. Seventy thousand dollars of documented labor stays seventy thousand. With no defensible split, the basis may be the full one hundred thousand.
Those figures are an exposure basis, not a premium quote. The actual trade classification matters, and state and manual rules must be checked.
Download the subcontractor audit guide. Need your experience modification worksheet? Use the separate request form. Give us your email, legal business name and address, renewal date or no-current-coverage status, and permission to handle the request. No phone number is requested.
Allow twenty-four hours for a person to handle it. If a worksheet is unavailable or authorization is needed, we'll explain the next step.
A subcontract price can become part of your workers’ comp audit.
Start by having your insurance professional confirm which subcontracted work creates exposure under the applicable state rule. Then establish acceptable evidence of workers’ compensation coverage for the work period and the records needed for any chargeable exposure.
Was the coverage adequate?
Collect certificates and supporting records. Have a professional confirm the coverage and dates; a document alone does not guarantee the audit treatment.
What trade was performed?
Roofing, framing, electrical, concrete, and excavation can create different classification questions. Do not combine every subcontractor into one generic “general contractor” class.
Source example: NCRB Rule 2-H, including responsibility, records, classification, and experience rating. This guide illustrates North Carolina’s published framework. Other jurisdictions and policy periods require their own review.
These percentages are minimums, not automatic discounts.
- Complete, accurate payroll records: the North Carolina example uses actual subcontractor payroll.
- No complete payroll, but a definite documented labor portion: compare that amount with the applicable contract-type minimum.
- No usable payroll and no defensible documented labor split: the full subcontract price can become the payroll basis.
| Contract type | Minimum payroll basis |
|---|---|
| Mobile equipment with operator | 33⅓% |
| Labor and materials | 50% |
| Labor only | 90% |
| Piecework | 100% |
These construction subcontractor rules are separate from vehicle-with-driver trucking rules. Confirm the applicable rule before applying a fraction.
Same $100,000 contract. Different records.
Illustration: a labor-and-material subcontract with chargeable uninsured exposure under the North Carolina rule.
| Available evidence | How the example works | Payroll basis |
|---|---|---|
| Documented labor: $40,000 | Higher of $40,000 and 50% × $100,000 | $50,000 |
| Documented labor: $70,000 | Higher of $70,000 and $50,000 | $70,000 |
| No defensible records or split | Full subcontract price | $100,000 |
| Complete actual payroll: $40,000 | Actual payroll branch, not the estimated-labor branch | $40,000 |
Payroll basis is not your premium. The actual trade classification, applicable rate, modification factor, policy terms, and other charges need separate review.
Explore the North Carolina rule example
Assume an insurance professional has confirmed this subcontract creates chargeable uninsured exposure under NCRB Rule 2-H. These figures illustrate payroll basis, not a premium quote or a rule for every state.
Illustrated payroll basis: $50,000.00
A definite documented labor portion is available, but complete actual payroll is not: use the higher of the documented amount and the contract-type minimum.
Contract-type minimum: $50,000.00.
Similar percentages do not mean identical rules.
Reviewed September 13, 2026. The 50-state selector is a review aid; only the named source examples have been checked here. Choosing a state does not change the North Carolina calculator.
Build one clear file for each subcontractor.
Identity and job
Legal business name, project state, work dates, and the actual trade performed.
Coverage evidence
Certificates and supporting records for the work period, plus any exemption information for professional review.
Contract and payments
Signed contracts, change orders, invoices, payment totals, and a clear scope of work.
Actual payroll
Complete payroll records where obtainable; identify who performed the work.
Documented labor split
Defensible labor, material, and equipment records. Do not assume a percentage supplies missing evidence.
Policy and renewal
Your legal insured name, address, renewal date, existing agent, and most recent available mod worksheet.
Ask your professional: “Which state rule applies to this subcontract, what records support the labor amount, and which trade classification will the auditor use?”
Why is my workers’ comp audit bill different from what I expected?
Start with the detailed audit and identify the amount or classification you question. Ask the carrier or auditor which records and rule were used, then compare that explanation with your policy, payroll and work records. Keep a written list of the disputed items and the evidence for each one so your insurance professional can help identify the appropriate review path.
Preparation guidance informed by North Carolina Rule 6’s written-dispute and supporting-record framework; it is not a nationwide appeal procedure.
What records should I put beside the audit?
Organize a file for each subcontractor: work and dates, project state, contract and payments, coverage records for that period, and available payroll or documented labor detail. Mark the specific audit line you want explained. Keep the underlying records available for secure review.
Adapted from this guide’s September 13, 2026 checklist and NCRB Rule 2-H (Latest displayed revision January 1, 2024; confirm policy-period applicability). These records do not determine employment status, final classification or an automatic exclusion.
Who can review a disagreement?
Start with the insurer and your insurance professional. The appropriate next step depends on the state and the issue. For example, California’s insurer review process addresses how to raise a rating-plan dispute with the insurer. North Carolina’s Rule 6 describes the bureau’s review of specified rate, loss-cost and rule-application disputes. Use the applicable process and confirm its requirements for your policy.
California source: No revision date displayed; checked September 27, 2026. North Carolina source: Address update August 26, 2024; rule revision July 1, 2021.
Do I have to request replacement coverage to get help?
You can start with an audit question. Tell us what you need explained and whether you also want coverage reviewed. Keep your existing agent involved, and provide detailed documents through the secure process when requested.
Tell us which part of the audit you question. You can keep your agent involved.
This explanation was adapted on . Source check: Codex. Responsible editorial role: WorkComp Finder editorial team. Source checks do not determine an individual account’s coverage or audit outcome.
Bring the records. Let a professional review the exposure.
A licensed insurance professional can review your subcontractor documentation, classification questions, and audit treatment. WorkComp Finder can help organize the request and connect you with an appropriate professional. If a FastechHR program may fit, the team can help prepare the opportunity for review while keeping your existing agent involved.
Understand your workers’ comp rating
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Retail agents and wholesalers can use this resource to prepare employer conversations. Retail-agent path → · Wholesaler path →