Workers' Comp Premium Calculator

How hours and overtime become a workers' comp premium

In most states the workers' comp premium is figured on payroll. The rating manuals divide payroll by 100 and multiply by the rate for your class code, and your experience mod then scales the result up or down. Pennsylvania's rating bureau (PCRB) shows the step with $90,000 of payroll at a 1.50 rate: $90,000 / 100 × 1.50 = $1,350 of premium before the mod.

This calculator builds that payroll from a timecard instead of a payroll report. Regular hours and paid leave hours are paid at the straight-time rate, time-and-a-half hours at 1.5 times it and double-time hours at 2 times it. Together that's gross pay.

Overtime is where hours and payroll part ways. Under the Basic Manual used by NCCI and North Carolina, the "extra pay" for overtime is left out of the payroll the premium is figured on. The North Carolina Rate Bureau's manual defines it as "the difference between the regular pay rate and the overtime pay rate multiplied by the number of overtime hours worked" (NCRB Basic Manual Rule 2-C-2-a). For time and a half that's one-third of the overtime pay, and for double time it's one-half. The calculator subtracts the same dollar amount: the hourly rate × (half of each time-and-a-half hour + each double-time hour).

With the defaults, 40 regular hours and 10 overtime hours at $20 an hour is $1,100 of gross pay. The overtime premium in it is $100, so the premium is figured on $1,000. At a $2.00 example class rate and a 1.00 mod, that's $20.00 for the week, $1,040.00 over 52 weeks, and $0.40 for each of the 50 hours worked. The exclusion saves $2.00 a week, or $104.00 a year. The overtime calculator and the double time calculator work out the pay side of those hours.

Overtime here means hours paid at a higher rate: past the hours normally worked, past 8 a day or 40 a week, or on Saturdays, Sundays or holidays (Rule 2-C-1). The overtime rules by state show which hours become overtime where you work. The exclusion has a condition, covered in the last section, and it doesn't apply to stevedoring classes whose code ends in "F". Some states don't allow it at all: Pennsylvania (PCRB Rule V) and Delaware (DCRB Rule V) list extra pay for overtime as payroll, and Nevada's payroll definition includes overtime pay (NAC 616A.200). Pick "Counted in full" for those states. With the defaults it adds $2.00 a week.

Washington's hourly premium and the paycheck withholding

Washington doesn't charge workers' comp on payroll. L&I, the state fund, charges based on "the worker's exposure to the risk of injury (hours worked)", so a raise doesn't change the premium but more hours do. Washington doesn't allow private workers' comp coverage: employers buy it from L&I or become certified to self-insure.

Each risk class's hourly rate comes from four funds. L&I multiplies the business's experience factor by the sum of the Accident Fund, Medical Aid Fund and Stay at Work base rates, then adds the Supplemental Pension Fund rate, which is the same for every class. L&I's worked example is 0.9789 × ($0.0221 + $0.0160 + $0.0003) + $0.1120 = $0.1496 per hour worked. That's an illustration from L&I's page, not a current rate, and it's this calculator's default. New businesses start at an experience factor of 1.0000 and get their own after about 18 months.

Workers and employers each pay half of the Medical Aid, Stay at Work and Supplemental Pension parts, and the employer pays the Accident Fund part alone. The rate notice prints the hourly withholding as [((Medical Aid + Stay at Work) × experience factor) + Supplemental Pension] ÷ 2 and tells the employer to withhold it "from employee pay for each hour they work." On L&I's example funds that works out to $0.0640 an hour (our rounding, to four places like L&I's $0.1496), which leaves $0.0856 for the employer. L&I says workers pay about 24% of the premium on average, but in this example the worker share is 42.8% of the rate because the pension part is large. L&I also says businesses that don't make the deduction still owe the whole premium.

In Washington mode, enter the two numbers from your own rate notice: Your Total Hourly Rate and the Hourly Employee Withholding. Both already include your experience factor, so the calculator doesn't apply one again. The mode covers hourly-rated classes only. A few classes are rated by units or square feet instead of hours.

For hourly workers, L&I counts actual hours, overtime included, and leaves out holiday, vacation and sick pay (Recordkeeping and Reporting Guides, F212-222-000). Salaried workers can be reported at 160 hours a month (480 a quarter) or at actual hours, with the same method for all of them. So an overtime hour costs the same premium as a straight-time hour, and paid leave costs nothing. With the defaults, 50 hours in a week at the example rates come to $7.48 of premium for the week and $388.96 a year. Of the weekly $7.48, $3.20 is withheld from the worker and $4.28 is paid by the employer.

What changes the number: paid leave, state rules and state funds

Paid leave goes opposite ways in the two systems. Under NCCI-style rules, pay for holidays, sick leave and vacations is payroll (NCRB Rule 2-B-1-f), so a paid day off adds premium at the class rate even though no one worked. In Washington it adds nothing. The calculator counts leave hours in gross pay in both modes and in the premium only in payroll mode. It leaves them out of the premium per hour worked.

In North Dakota, Ohio, Washington and Wyoming, coverage comes from the state fund rather than private insurers (Ohio and Washington also let qualifying employers self-insure, and Wyoming requires the state fund for the industries its law lists). Those funds set their own rates and payroll rules, so in Ohio, North Dakota and Wyoming treat the payroll mode as a rough guide.

The estimate leaves out the steps a real policy adds after the class rate and mod: schedule rating, premium discounts, expense constants, minimum premiums, deductible credits, terrorism and catastrophe charges, and state assessments. A premium audit replaces estimated payroll with your actual payroll, and some manuals round each premium line to the nearest dollar (PCRB Rule VI). Nevada also caps the payroll counted for each employee.

The cost per $100 of gross pay is the same number as a percent of wages. At the defaults, $1.82 per $100 is 1.82% of pay, the kind of figure the labor cost calculator asks for when it builds a fully burdened hourly rate.

Hours records that hold up at audit

The overtime exclusion depends on records. The NCRB manual allows it only "provided that the insured's books and records are maintained to show overtime pay separately by employee and in summary by classification." Without that split, the exclusion isn't allowed.

Washington asks for a time record showing the days worked and the hours worked each day, kept for three full calendar years after the year the work was done (F212-222-000).

The premium is built from hours, and in Washington the hours themselves are the bill. So a worker's own log of shifts, breaks and overtime is worth keeping. You can check a paycheck's L&I line, or the overtime on a pay stub, against it. The biweekly timecard calculator totals regular and overtime hours for a pay period, and the pay stub decoder explains the lines on a stub. TimeClock44 records the hours you work, splits overtime by your daily or weekly rule, and exports a CSV or PDF timesheet.

Disclaimer: Estimates only. This calculator is for information and isn't insurance, tax or legal advice. Rates, payroll rules and your final premium come from your insurance carrier, your state's rating bureau or your state fund, and their figures govern.