The Confusing Part
Low class code rates look like an easy premium win.
Then the audit hits and the savings disappear.
How It Works
Audits reconcile actual payroll and job duties. If codes are misclassified, carriers apply back premium.
Those corrections also affect your future rating tier.
Where It Breaks Down
It stops working when audits are frequent or when job duties blur across classes.
The Tradeoffs
- Lower current premium vs. higher back premium later.
- Cleaner audit history vs. a one-time savings hit.
What Moves the Outcome
Risk Signals
- Claim frequency tied to job roles
- Audit findings and payroll corrections
Coverage Structure
- Accurate class code assignment
- Payroll reporting detail
Market Context
- Audit posture by carrier
- Repricing after audit changes
Deeper context
If you want the longer read, see Workers Comp Audits: How Class Codes Back-Bill You and Payroll Volatility: How It Moves Workers Comp More Than You Expect.
How to Decide
If your codes are aggressive, fix them before audit. If accurate, document and defend.
Minnesota note: claim patterns and contractor timelines vary by county, so Twin Cities experience isn’t always a perfect proxy for outstate Minnesota.