This means total employee wages are directly tied to workers' compensation insurance costs. Another common mistake is that you might have employees you don’t know about. In the U.S., anyone you hire to do work for your company will be entitled to compensation if injured on the job.

These numbers may fluctuate, which is part of the reason plans are audited after an end date, to ensure more accurate readings in the future. Let’s say you own an accounting firm in Pennsylvania with 10 employees, all making $50,000 per year. Assuming they how to calculate workers comp cost per employee mostly perform clerical, in-office work, your class code would be 0953, and the rate could be as low as $0.07. You probably wouldn’t expect an office receptionist to get seriously injured on the job, but a construction worker might be a different story.

What Is Workers' Compensation Insurance?

There are also factors other than payroll and your type of business that the insurance company might use to assess your risk for your premium calculation. For instance, in construction, smaller companies tend to have the most on-site accidents. To mitigate these issues, some insurance brokers offer lower premiums if you commit to a health and safety training program or specific staff training for any issues that are affecting your claims. Employers can keep costs down by having safety programs in place that help reduce injuries.

Employers should discuss with their insurance carrier what types of safety programs will help them get a discount on the policy. Employers should also work with insurance carriers to report fraud. If employers can reduce fraud, they can help reduce the overall costs of policies.

How does the location of my business factor into a workers’ comp policy?

The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others make well-informed decisions. Educating your employees on safety within the workplace can help prevent slips and falls and other accidents. Use of and access to this information, site or any of the links contained within this site does not create a relationship between the user and E-COMP.

If they add or lose employees, the premium will update — instead of waiting until the annual audit to receive a credit or debit. In the U.S., the Fair Labor Standards Act (FLSA) does not require employers to give their employees any vacation time off, paid or unpaid. Therefore, when interviewing and deciding between jobs, it may be wise to ask about the PTO policy of each potential employer. With that said, the average American gets around 10 days of PTO a year; the bottom 25% of wage earners only get an average of four paid vacation days a year. Most companies tend to institute a policy that increases the amount of PTO an employee gets every several years or so as an incentive to retain workers.

How Will COVID-19 Impact Workers Compensation Insurance?

A workers compensation policy is based upon the actual payroll of your company. The initial policy is based upon your estimated payroll https://www.bookstime.com/ for the upcoming 12 months. At the expiration of the policy the insurer or their third party representative will audit your policy.