Pay-as-you-go workers comp: how it works and who offers it
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Pay-as-you-go workers comp charges your premium with each payroll, based on the wages you actually paid in each class code, instead of a deposit on estimated payroll and an audit after the term. BBSI, a PEO, describes its version as "payroll-based premiums with no deposits or year-end audits" (BBSI pricing page, checked October 16, 2026).
The price itself works the same way as any policy: payroll per $100, the rate for each class code, and your experience mod. What changes is when you pay and how large the year-end surprise can be.
Pay-as-you-go workers' comp is a billing method in which the workers' compensation premium is calculated and charged each pay period from actual payroll by class code, rather than paid as a deposit on estimated annual payroll and trued up at audit.
On this page
Pay-as-you-go vs a standard policy
| Standard policy | Pay-as-you-go policy | |
|---|---|---|
| What the premium is based on | Payroll you estimate at the start of the term | Wages you actually ran, each payroll |
| Up-front payment | Deposit, then installments | Charged with each payroll; ask whether any deposit applies |
| After the term | Audit compares actual payroll with the estimate; you pay more or get a refund | Smaller gap to settle; ask whether the carrier still audits |
| Cash flow in a slow month | Same installment regardless of payroll | Lower charge when payroll is lower |
| Main risk | Large audit bill after a growth year | Wrong class code mapping in payroll repeats every pay period |
HRPricing summary of how the two billing methods work, Oct 2026. Terms vary by carrier and PEO; confirm each line in your policy.
The premium formula does not change: payroll per class code divided by 100, times the rate, times your experience mod. Pay-as-you-go changes timing, not price. If two quotes show different rates per $100 of payroll, that difference is real; the billing method alone does not make one cheaper. For the formula and the state rules, see what workers' comp insurance costs.
Who offers it, from our research
| Provider | Type | What the provider says | Price shown? |
|---|---|---|---|
| BBSI | PEO | "Payroll-based premiums with no deposits or year-end audits" | No, quote only |
| ADP TotalSource | PEO | Workers' comp is included in the service fee; billing method not stated | No, quote only |
| Paychex PEO | PEO | Workers' comp administration and claims under a PEO master workers' comp policy; billing method not stated | No, quote only |
| Justworks PEO | PEO | Workers' comp required for PEO clients; billing method not stated | PEO fee $79 or $124 per employee per month, workers' comp extra |
| Square Payroll | Payroll software | Workers' comp listed as an add-on; terms not stated | No |
| NEXT Insurance | Carrier | Sells workers' compensation insurance; payment options not in our research | No |
Sources: BBSI, ADP TotalSource, Paychex PEO, Justworks and Square pricing pages, checked Oct 16, 2026.
Only BBSI's page, among those we checked, spells out payroll-based billing with no deposit and no year-end audit. For everyone else, ask the questions in the checklist below and get the answers in the policy or service agreement, not a sales email.
BBSI's wider terms are in our BBSI review, and the PEO fee picture is in PEO cost per employee.
The math per payroll
Here is how a pay-as-you-go charge works for a 10-person team earning $50,000 each ($500,000 a year), paid every two weeks (26 payrolls), all in one class code. The rate is left as a variable because no rate was published in our research.
| Step | Calculation | Result |
|---|---|---|
| Wages per payroll | $500,000 / 26 | $19,230.77 |
| Rate units per payroll | $19,230.77 / 100 | 192.31 |
| Charge per payroll per $1.00 of rate (mod 1.00) | 192.31 x $1.00 | $192.31 |
| Charge per year per $1.00 of rate | $192.31 x 26 | $5,000 (rounded) |
HRPricing arithmetic, Oct 2026. Salary is an example; multiply by your quoted rate and experience mod.
A seasonal business sees the benefit most. If summer payroll doubles, the summer payrolls carry double the premium and the winter ones carry less, instead of a flat installment and an audit bill later. To see workers' comp next to wages and payroll taxes, use the employee cost calculator.
State-fund states: North Dakota, Ohio, Washington and Wyoming
In four states the state runs the workers' comp fund, so a private pay-as-you-go policy is not the route:
- North Dakota: Workforce Safety & Insurance (WSI). Coverage is required before you hire the first employee.
- Ohio: Bureau of Workers' Compensation, for any employer with 1+ employee regularly in service; self-insurance only for qualifying large employers.
- Washington: Labor & Industries covers all employments, with the exclusions in RCW 51.12.020; self-insurance is possible.
- Wyoming: coverage through the Department of Workforce Services is required for extra-hazardous industries by NAICS class; other businesses may elect it.
If you have staff in one of these states and others elsewhere, you may need state fund coverage for one group and a private policy for the rest. Ask any carrier or PEO how they handle it.
Questions to ask before you sign
- Is there a deposit? BBSI says it has none; ask everyone else for the amount and when it is refunded.
- Is there an audit? If yes, how often, and what triggers an extra charge.
- Which payroll systems connect? And who maps each employee to a class code.
- What is my rate per $100 of payroll for each class code, and my experience mod?
- Is there a minimum premium or a per-payroll fee?
- What happens when I cancel? Notice period, final audit and any short-rate charge.
- For a PEO: is workers' comp a separate line on the invoice, or folded into the admin fee? An ADP TotalSource reviewer on Capterra said "the admin fees are hidden in the workers comp rates" (October 23, 2024, a review more than a year old).
Common mistakes
- Assuming pay-as-you-go means no audit. Only BBSI's page in our research says so. Ask.
- Letting payroll guess the class code. A wrong code is billed every pay period and fixed only at audit.
- Leaving owners or officers out by default. Florida and Georgia count officers and LLC members toward their headcount tests.
- Forgetting the state fund. In North Dakota, Ohio and Washington the state fund is the coverage.
- Waiting for a threshold you have already hit. Most states require coverage from the first employee; see the first-hire checklist.
Comparing PEOs on workers' comp? Our PEO rankings show scores and published fees.
Frequently asked questions
What is pay-as-you-go workers comp?
Is pay-as-you-go workers comp cheaper?
Does pay-as-you-go workers comp still have an audit?
Can I get pay-as-you-go workers comp in Ohio or Washington?
Does my payroll provider offer pay-as-you-go workers comp?
Sources (12)
- BBSI: BBSI pricing (checked Oct 16, 2026)
- ADP: ADP TotalSource (checked Oct 16, 2026)
- Paychex: Paychex PEO (checked Oct 16, 2026)
- Justworks: Justworks pricing (checked Oct 16, 2026)
- Square: Square Payroll pricing (checked Oct 16, 2026)
- Capterra: ADP TotalSource reviews, page 4 (read Oct 16, 2026)
- Workforce Safety & Insurance: North Dakota workers' comp coverage rules (checked Oct 16, 2026)
- Ohio Revised Code: Ohio workers' comp coverage rules (checked Oct 16, 2026)
- Washington State Legislature: Washington workers' comp coverage rules (checked Oct 16, 2026)
- Wyoming Department of Workforce Services: Wyoming workers' comp coverage rules (checked Oct 16, 2026)
- Florida Division of Workers' Compensation: Florida workers' comp coverage rules (checked Oct 16, 2026)
- Georgia State Board of Workers' Compensation: Georgia workers' comp coverage rules (checked Oct 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.