How is workers'comp calculated for an employer?

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Workers' Compensation Insurance is a state-mandated, state-regulated insurance requiring employers to purchase an insurance policy to cover any worker injured or made ill due to exposure in the workplace. Texas is the only state not requiring workers' compensation insurance.

Classification

Many states use the NCCI classification system for each worker. Check with your state to verify if they use NCCI or their own classification system.

Classification is made based on industry, not job performed. For example, housekeeping staff working in a hospital would be classified as health care, not janitorial staff.

Standard Exemption

Clerical staff are always classified as clerical regardless of industry.

Basic Calculations

Using the basic rate per hundred dollars of compensation, or payroll, you apply the different workers' compensation classifications to each employee based on risk level.

Experience Modification Factor

This rate is based on previous claims and losses, and may raise or lower an employer's workers' compensation premium.

Other Factors

Size of a company or no assigned risk plan may affect the rate a company pays for workers' compensation.

Source:

Workers Compensation Audit: How to Calculate Workers' Comp Insurance Rates

Entrepreneur: Workers' Compensation 101

More Information:

NCCI Holdings, Inc.: Your Workers Compensation Resource

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How is workers'comp calculated for an employer?

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