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Insurance , Payroll , PEO , Small Business , Workers Comp

4 Tips for Ensuring Accurate Input for Your Workers’ Comp Calculator

If you own a business and have employees working for you, workers’ compensation insurance is imperative. Not only is it a legal requirement in most states, but it helps protect your employees as well as your business in the event someone gets injured on the job. Accidents happen every day, and knowing that you’re covered if one of your employees gets injured at work can alleviate stress and save money while they focus on healing.


Accurately calculating the cost of your workers’ comp for each employee is crucial not only for ensuring you find the best coverage and rates, but also for protecting you in the event of an audit. Keep reading for 5 tips for ensuring accurate input for your workers’ comp calculator.

1. Double-check your payroll estimates

Calculating the cost of workers’ compensation can be complex, so double-checking every step of the process is important—starting with payroll. You’ll need to consider how many full-time employees you have versus how many part-time and seasonal workers are a part of your company. The more precisely you can determine the annual pay for each employee, the more accurate your workers’ compensation costs will be.

2. Classify your employees correctly

Unless your state has their own classification system, workers’ compensation class codes are typically established by the National Council on Compensation Insurance (NCCI). Class codes are determined based on how high risk the type of work is. Knowing who establishes class codes in your state and ensuring that you’ve classified your employees accurately is necessary for calculating your cost of workers’ compensation.

3. Be sure the premium rate for each employee is accurate

The premium rate for each employee will vary depending on how they’re classified by the state or NCCI. In general, the higher the risk involved with a particular job, the higher the insurance premium will be for that specific job. The class code associated with someone in construction, for instance, likely means a higher rate than the class code of someone who works in an office.

4. Include deductions

Take deductions into account when you’re calculating the cost of workers’ compensation for each of your employees. Additional pay such as tips, overtime, or severance shouldn’t be included in an employee’s annual pay when calculating their insurance cost. Your state will have their own rules and regulations when it comes to deductions, and each business will have their own requirements. Be sure to confirm what applies to your own unique situation before diving into the math.

A final note

If you own a business and manage employees, having workers’ compensation insurance is crucial. Calculating your workers’ compensation costs, however, can be complicated. If you’re looking for a simplified approach, consider partnering with a PEO to help make the process as seamless as possible. If you’re calculating the cost yourself, be sure to keep these 4 tips in mind for ensuring accurate input for your workers’ comp calculator.