Workers' compensation is usually sold as an annual policy: you estimate next year's payroll, pay a deposit, and an audit after the year settles the difference. For a small employer whose payroll swings with the season, that means cash out up front and a possible bill a year later. Pay-as-you-go flips it: the premium is calculated on each payroll's actual wages and paid as you go. The catch is that it works only when your payroll provider and your insurer are connected. We read the providers' own pages and North Dakota's state fund on October 28, 2026. Nothing here comes from a hands-on trial.
For whom: an employer with 1 to 50 employees, especially one with seasonal or uneven payroll. Not for: an employer in North Dakota, Ohio, Washington or Wyoming shopping for a private policy; see the state-fund section below.
How each provider offers it
| RUN Powered by ADP | OnPay | Square Payroll | |
|---|---|---|---|
| Program | Pay-by-Pay, through ADP's insurance agency | Workers' comp listed as an add-on to its plans | Policies through its partner NEXT |
| How premium follows payroll | Calculated each time you run payroll and forwarded to the carrier | Deducted automatically during each payroll | Premiums adjust with payroll data; Square syncs with NEXT after each pay run |
| Upfront deposit | ADP: traditional programs can require 25-100% of estimated premium; Pay-by-Pay may eliminate it with most carriers | OnPay: typically no upfront deposit with pay-as-you-go | Not stated on Square's page |
| Conditions | ADP payroll with ADP tax filing, consistent payroll, a policy with a participating carrier where ADP's agency is agent of record | Not stated on the pages we read | Applicants are individually underwritten; not all qualify |
| State funds | Ohio: ADP remits premium payments to the Ohio Bureau of Workers' Compensation | OnPay: excludes the four state-fund states | Not stated |
Our pick
ADP Pay-by-Pay, if you run RUN. It is the most completely documented of the three: ADP states how the premium is computed each payroll, who receives it, the eligibility conditions, and that it produces a premium report by employee, class code and check date. Its Ohio handling is a practical bonus, since Ohio employers must buy from the state fund and ADP still remits each payroll's premium there.
- Pick OnPay's add-on if OnPay is already your payroll: the premium comes out with each payroll and OnPay says pay-as-you-go typically needs no upfront deposit. Ask which carrier writes the policy before you sign.
- Pick Square's NEXT policy if you run Square Payroll: the sync after each pay run is automatic, but Square's page does not describe deposits, so ask NEXT directly.
- Keep your current policy if your payroll is stable year-round and your carrier's annual terms are good; pay-as-you-go mainly helps when payroll moves.
The four state-fund states
North Dakota's Workforce Safety & Insurance states that North Dakota is one of four exclusive state funds in the country, with Ohio, Washington and Wyoming, and that employers there must buy workers' compensation from the state fund rather than from private insurers. In those states, a payroll provider's private policy is not an option; what a provider can offer is help remitting premiums to the fund, as ADP describes for Ohio.
Before you switch
- Check class codes. Pay-as-you-go is only as accurate as the job classification of each employee in payroll.
- Ask about the audit. Premiums that follow real wages reduce the year-end gap, but the carrier can still audit.
- Do not cancel the old policy first. Bind the new one, then cancel, so there is no day without coverage.
For the benefits that sit next to workers' comp in payroll, see payroll and benefits administration; for first-time setup, see how to set up payroll.
Traceable evidence
Sources for this decision
- officialNorth Dakota Workforce Safety & Insurance, agency overviewNorth Dakota Workforce Safety & Insurance · checked Oct 28, 2026 · supports: North Dakota WSI's statement that North Dakota is one of four exclusive state funds in the country, the others being Ohio, Washington and Wyoming, where employers must purchase workers' compensation from the state fund rather than private insurers, unlike the other 46 states and D.C.; it does not describe the other states' self-insurance rules.Open source ↗
- vendorADP Pay-by-Pay workers' compensation premium payment programADP · checked Oct 28, 2026 · supports: ADP's Pay-by-Pay page as read on October 28, 2026: premiums are calculated each time the client runs payroll and forwarded to the carrier, traditional programs can require 25-100% of estimated premium as an upfront binder that Pay-by-Pay may eliminate with most carriers, eligibility requires ADP payroll with ADP tax filing, consistent payroll and a policy with a participating carrier with ADP's agency as agent of record, a premium report by employee, class code and check date is produced, and in Ohio ADP's agency remits premiums to the Ohio BWC; it does not state premium rates and mandatory state assessments may still apply.Open source ↗
- vendorOnPay: why businesses like pay-as-you-go workers' comp (updated September 23, 2025)OnPay · checked Oct 28, 2026 · supports: OnPay's article (updated September 23, 2025) stating that with pay-as-you-go workers' comp the premium is deducted automatically during each payroll, that typically no upfront deposit is required and audit risk is lower, and that it is not available in North Dakota, Ohio, Washington and Wyoming, where businesses must buy from state agencies; it does not name the carrier or state premiums.Open source ↗
- vendorOnPay pricing page, inclusions and add-onsOnPay · checked Oct 28, 2026 · supports: OnPay's pricing page as read on October 28, 2026: Payroll Essentials at $49 a month plus $6 per worker; W-2s, 1099s and year-end filings, unlimited pay runs and schedules, federal, state and local tax filings, paying workers in any number of states and expert support by phone, chat and email included with all plans; HR, time tracking and bundles priced separately; Compliance Resources, Live HR Support, health insurance, workers' comp and 401(k) listed as add-ons; no implementation or integration fees; it does not state add-on prices for workers' comp or direct deposit timing.Open source ↗
- vendorSquare Payroll workers' compensation pageSquare · checked Oct 28, 2026 · supports: Square's workers' compensation page as read on October 28, 2026: policies are available through its partner NEXT Insurance, premiums adjust automatically based on payroll employee data, Square syncs with NEXT after each pay run, applicants are individually underwritten and not all qualify, and Square may receive compensation from NEXT; it does not state deposits, premiums or excluded states.Open source ↗
- vendorRUN Powered by ADP official product siteRUN Powered by ADP · checked Aug 5, 2026 · supports: Vendor-published product scope used to verify capabilities relevant to this buyer context: Small employers comparing a payroll-led system backed by a broad US HR services organization.. It does not prove the guide's fit verdict, configured performance, current pricing or compliance.Open source ↗
- vendorOnPay official product siteOnPay · checked Aug 5, 2026 · supports: Vendor-published product scope used to verify capabilities relevant to this buyer context: Small employers and accountant-managed businesses comparing a focused payroll and HR workflow.. It does not prove the guide's fit verdict, configured performance, current pricing or compliance.Open source ↗
- vendorSquare Payroll official product siteSquare Payroll · checked Aug 5, 2026 · supports: Vendor-published product scope used to verify capabilities relevant to this buyer context: Small hourly businesses evaluating payroll beside Square point-of-sale and team workflows.. It does not prove the guide's fit verdict, configured performance, current pricing or compliance.Open source ↗