So how much does workers comp cost in California? CA workers compensation insurance rates are set and regulated by the Workers' Compensation Ratings Bureau & rated on payroll based on your business classification.
How Much Does Workers Comp Cost In California?
Under California law, all employers that have more than one non-owner employee or partner must provide insurance in the event of any injury or illness that happens at the workplace. Businesses that do not have workers compensation insurance are breaking the law, and are subsequently opening themselves up to steep fines and lawsuits. The provision of workers compensation insurance is not only required, but it also helps protect companies from employee lawsuits.
Since workers compensation insurance is required by CA law, company owners must find a way to fit it into their budgets. This involves answering questions like how much does workers comp cost in California? and what affects the premium paid? It is also important to find a reputable agency, so you know the coverage is complete and available when needed.
The Cost of Workers Compensation In California
CA workers compensation rates are regulated by the Workers Compensation Ratings Bureau of California (WCIRB). The state assigns each occupation a "risk classification", which is then associated with a specific dollar amount. Rates are set according to the risk associated with each occupation. For example, roofers are at a higher risk of injury while on the job, so the base rate would be higher than for an officer worker - who is at a lower risk of injury.
The amount payable by the employer is the base rate, determined by the risk factor of the job, and that employee's total payroll. Businesses that have a history of poor safety performance may also be required to pay additional fees and penalties on top of the estimated premium. How much does workers comp cost in California? In general, if a company has an excellent safety record and is not subject to any additional fines or fees, its workers compensation cost can be arrived at as follows, using the CA landscaper classification as an example:
- Base rate: $7.71
- Total Payroll of Employee: $500 per week
- Formula to Determine Premium: $500 X 7.71% = $38.55 per week
In some situations, employers may have more than one risk classification that applies to any given worker. For example, a staff member's job may have both a high-risk and a low-risk classification. The employer must combine both rates to arrive at the full compensation premium payable. They cannot get away with only paying the rate associated with the low-risk classification.
According to the WCIRB: For most industries, classifications are assigned by analyzing an employer's overall CA operations and identifying one classification that describes the business as a whole. This approach is based on the premise that, in general, employers within a specific industry operate in a similar manner and engage in comparable processes. The resulting pure premium rate for the classification reflects the average anticipated cost of benefits, per every $100 of payroll, incurred by businesses within the particular industry. This approach is relatively easy for employers to administer in that most employers are assigned to only one classification. Consequently, this system promotes the gathering of accurate payroll and loss data and enables the WCIRB and insurers to develop rates specific to a particular industry. Some industries have their own special classification procedures.
Determination of Base Rate
Some business owners wonder how base rates are determined. As mentioned, these rates are based on the risks associated with any given job. The type of risks assessed when making this determination are those for physical illness, mental illness, and injury. Jobs that have a high degree of stress, for example, may have base rates that rival those with a high-risk level for physical injuries.
It is important to know that these rates are set by the government, not individual insurance companies. You may be able to find other perks and deals by shopping around, but never go with an insurance company that promises to offer you a lower base rate than required by law. As of December of 2017, the base rates for a few of California's more popular jobs were as follows:
- Masonry = $14.63 per $100 of employee payroll
- Landscaping = $7.71
- Plumbing = $7.01
- Restaurant/Bar Staff = $4.34
- Clerical = $0.40
What Can Impact Your Premium?
It is also important to know what can impact your total premium. Your safety record plays a huge factor, with lower premiums serving as incentive for CA companies to improve their own health and safety measures. Employers that offer their staff members health coverage also see lower premiums, making it a good idea to consider offering some level of health coverage. The money you save on premiums is often more than enough to cover health plans.
Even though base rates and other fees are set by the state of California, company owners should still learn all they can about workers compensation insurance while shopping around for the best company.
Popular Classes Of CA Workers Comp
How Much Does Workers Comp Cost In California? - The Bottom Line
We hope this article on how much does workers comp cost in California? has been informative. There are ways you can easily fit a CA workers compensation insurance plan into your budget, simply by taking advantage of other incentives and discounts an insurance agency can offer. If you find that calculating your anticipated premiums is complicated, an insurance agent can help. They understand how the base rate and premium system works, and can direct you to the perfect plan for your organization.