Workers comp is priced per $100 of payroll, and the rate tracks the danger of the work. Office staff cost about $0.15 per $100. Roofers cost about $15.00, a hundred times more. A restaurant running $500,000 in annual payroll pays roughly $9,000 a year. Three numbers set your bill: payroll, class rate, and your claims history.
Every policy in the country is built on the same formula: annual payroll divided by 100, times your class code's rate, times your experience modifier. That's it. No underwriter is eyeballing your storefront; the price falls out of three inputs.
The class code is the big one. Insurers group jobs by how often people get hurt doing them and how expensive those injuries are. Clerical work (code 8810) generates almost no claims, so it's nearly free to insure. Roofing (5551) generates falls, and falls generate six-figure claims, so it carries one of the highest rates on the books. Your state sets or approves the rates, which is why the same restaurant pays different premiums in Florida and in California.
These are national average rates in the style insurers use, per $100 of payroll. Your state's numbers will differ, but the ordering barely changes:
| Class code | Industry | Avg rate per $100 payroll | Cost on $500K payroll |
|---|---|---|---|
| 8810 | Clerical / office | $0.15 | $750/yr |
| 8017 | Retail store | $1.40 | $7,000/yr |
| 9082 | Restaurant | $1.80 | $9,000/yr |
| 8380 | Auto repair | $2.20 | $11,000/yr |
| 8835 | Healthcare / home care | $3.00 | $15,000/yr |
| 5190 | Electrical | $3.40 | $17,000/yr |
| 5183 | Plumbing | $4.20 | $21,000/yr |
| 0042 | Landscaping | $6.50 | $32,500/yr |
| 5645 | Carpentry | $8.00 | $40,000/yr |
| 7228 | Trucking | $9.50 | $47,500/yr |
| 5551 | Roofing | $15.00 | $75,000/yr |
Read the last column and the business model implications jump out. A roofing company's insurance bill can rival a mid-level salary, which is why safety programs in the trades aren't paperwork theater. They're margin.
Per-head math makes budgeting easier when you're hiring. Multiply the salary by the rate and divide by 100:
Two caveats. Most insurers charge a minimum premium, often somewhere in the high hundreds, so a single low-risk employee won't literally cost $75. And if your team spans classes, say two estimators and five carpenters, each group is rated at its own code. Run them separately and add the results, which is exactly how a payroll calculator plus a class-rate lookup would do it.
Enter payroll, pick your industry class, set your e-mod. The calculator shows annual and monthly premium at national average rates.
Workers Comp Calculator →The experience modifier, or e-mod, is your claims report card. It compares your loss history to businesses like yours and scales your entire premium. Everyone starts at 1.00. Run clean for a few years and you might earn 0.85, an automatic 15% discount. Rack up claims and a 1.30 mod turns that $40,000 carpentry premium into $52,000.
The mod has teeth beyond the invoice, too. Plenty of general contractors and government contracts won't hire a sub with a mod over 1.0, so a bad year of claims can cost you bids, not just premium.
Premium is charged on gross wages: salaries, hourly pay, bonuses, and commissions. Most states let you exclude the premium portion of overtime, meaning time-and-a-half is counted at the straight-time rate if your records break it out. Tips are generally excluded as well. Owners are their own case: sole proprietors and partners are usually exempt by default, and corporate officers can often elect out. Keep the payroll estimate honest, because the year-end audit reconciles it against reality either way. And remember premiums are a deductible business expense come tax time, which softens the blow a little when you run the numbers through an income tax calculator.
Workers comp costs whatever your payroll and risk class say it costs: from under $100 a year for a lone office hire to five figures for a small crew in the trades. You can't change the formula, but you control every input: classify people correctly, keep claims rare and well-managed, and audit-proof your payroll records. Price your next hire before you make the offer, and check what their wage really costs with a salary calculator alongside the premium.
It depends almost entirely on the job. An office employee earning $50,000 costs about $75 a year to cover at a $0.15 clerical rate. A restaurant worker earning $30,000 runs about $540 a year at $1.80. A roofer earning $60,000 costs around $9,000 a year at $15.00. Same law, wildly different risk.
Usually not. Most states let sole proprietors and partners exclude themselves, and many let corporate officers opt out too. Excluding yourself cuts premium, but it also means an injury on the job lands on your health insurance, which often excludes workplace injuries. Contractors should check twice: many general contractors require subs to carry coverage on themselves regardless.
Over time, yes. A few clean years earn an experience modifier below 1.00, which discounts your whole premium; 0.85 means 15% off. The smallest businesses aren't experience-rated at all until their premium crosses a state threshold, so a spotless record helps them mainly at renewal shopping time.
Your premium is provisional, based on the payroll you estimated up front. After the policy year ends, the insurer audits actual payroll and trues it up: you owe more if payroll ran high, and you get money back if it ran low. Underestimating on purpose just converts into a bigger audit bill later, sometimes with a penalty.