Workers comp typically costs $0.75 to $2.74 per $100 of payroll on average, though rates range from under $0.50 in low-hazard office roles to $15 or more per $100 for high-risk trades like roofing or logging. For a single employee earning $50,000/year, that often translates to $375–$1,370 annually. Who this is for: Small business owners budgeting for workers comp or comparing quotes for the first time.
TL;DR — Key Takeaways
- Workers comp is priced per $100 of payroll, not as a flat fee per head.
- Rates vary widely by job classification code (class code)—a clerical worker costs far less to insure than a roofer or ironworker.
- Your experience modification rate (EMR) can raise or lower your premium by 25–50% based on your claims history.
- Most states require coverage once you hire one or more W-2 employees; thresholds and rules vary by state [verify state].
- An independent agency like Morrow can shop multiple carriers to find the lowest qualifying rate for your specific class codes.
How Is Workers Comp Premium Calculated?
Workers comp premium is not a fixed dollar amount per employee. It is calculated using this formula:
Premium = (Payroll ÷ 100) × Class Code Rate × Experience Mod (EMR)
Payroll is the total annual wages for each class of employee. Class code rate is a dollar amount set by the National Council on Compensation Insurance (NCCI) or an individual state rating bureau, reflecting the relative injury risk of a given job type. EMR is a multiplier — typically between 0.75 and 1.50 — that adjusts your premium based on how your actual claims compare to industry peers. An EMR below 1.0 saves you money; above 1.0 costs you more.
Rate Examples by Class Code
| Job Type | Typical NCCI Class Code | Approximate Rate per $100 Payroll* |
|---|---|---|
| Clerical / office worker | 8810 | $0.18 – $0.50 |
| Retail store employee | 8017 | $1.00 – $2.00 |
| Carpenter / framing | 5651 | $6.00 – $12.00 |
| Plumber / pipefitter | 5183 | $4.00 – $8.00 |
| Electrician | 5190 | $3.50 – $7.00 |
| HVAC technician | 5537 | $4.50 – $9.00 |
| Roofer | 5551 | $12.00 – $30.00+ |
| Janitorial / cleaning | 9015 | $3.00 – $6.00 |
| Restaurant / food service | 9082 | $2.00 – $4.50 |
| Landscaping / groundskeeping | 0042 | $6.00 – $14.00 |
*Rates are approximate industry ranges sourced from NCCI and state bureau filings as of 2025–2026. Actual rates depend on your state, carrier, and underwriting review. Rates in monopolistic states (OH, ND, WA, WY) are set by the state fund and may differ.
What Is the Average Cost of Workers Comp Per Employee?
The National Academy of Social Insurance (NASI) and NCCI data consistently show the national average cost of workers comp hovering around $1.00–$1.50 per $100 of payroll across all industries combined. However, that average is heavily influenced by the mix of white-collar vs. blue-collar jobs in the sample.
A more practical rule of thumb by industry segment:
| Industry Segment | Typical Annual Cost per $50K Employee |
|---|---|
| Office / professional services | $90 – $250 |
| Retail / light commercial | $500 – $1,000 |
| Skilled trades (electric, plumbing) | $1,750 – $4,000 |
| General construction / carpentry | $3,000 – $6,000 |
| Roofing / demolition | $6,000 – $15,000+ |
| Trucking / transportation | $2,000 – $6,000 |
These are illustrative ranges, not guaranteed premiums. Your actual quote depends on payroll, state, class codes, EMR, and carrier underwriting.
What Factors Drive Workers Comp Costs Up or Down?
Factors That Increase Premium
- High-hazard class codes — physical, outdoor, or heavy-machinery work carries higher base rates.
- Poor claims history — an EMR above 1.0 increases every dollar of premium.
- High payroll — more payroll in risky classifications directly multiplies cost.
- State of operations — some states (California, New York, New Jersey) have structurally higher rates due to medical costs and benefit levels.
- Subcontractor exposure — if you hire uninsured subs, their payroll may be added to your audit.
Factors That Decrease Premium
- Low EMR — a clean claims history drives EMR below 1.0, reducing your premium.
- Schedule credits — many carriers offer credits for safety programs, drug-free workplaces, or owner participation in safety training.
- Deductible plans — taking a per-claim deductible (e.g., $2,500–$25,000) can lower upfront premium.
- Pay-as-you-go workers comp — premium based on actual payroll each pay period reduces year-end audit surprises.
- Multiple carrier options — independent agents can place your account with the carrier that files the most competitive rate in your state for your class code.
How to Get a Workers Comp Quote in 5 Steps
- Gather your payroll by job type. Break out total annual wages for each type of employee (e.g., office staff vs. field technicians). Mixing payrolls into one bucket overstates cost.
- Identify the correct class codes. Your agent or carrier assigns NCCI (or state bureau) classification codes based on the actual work employees perform. Misclassification can lead to premium disputes at audit.
- Pull your EMR (if applicable). Experience modification applies once you meet a certain premium threshold (typically $5,000–$10,000 in standard premium, depending on state). First-year businesses usually start at 1.0.
- Request competing quotes. An independent agency submits to multiple admitted carriers and, where necessary, to the state's assigned risk plan (residual market), to find the best available rate.
- Review the policy before binding. Confirm the class codes, payroll estimates, policy limits, and whether a premium audit clause is included. Workers comp policies are almost always subject to annual payroll audit.
Real-World Example: Electrical Contractor, 5 Field Electricians
Business: Residential electrical contractor in Texas Employees: 5 licensed electricians, each earning $60,000/year Total payroll: $300,000
Class code: 5190 (Electrical Wiring — Within Buildings) Assumed rate in Texas: $5.50 per $100 payroll (illustrative; TX uses a competitive open-rating market) EMR: 0.90 (clean claims history, slight credit)
Premium calculation: - Base premium: ($300,000 ÷ 100) × $5.50 = $16,500 - EMR adjustment: $16,500 × 0.90 = $14,850 annual premium - Per-employee cost: approximately $2,970/year or $247/month per electrician
If this same contractor had an EMR of 1.25 from prior claims, the premium would jump to $20,625 — nearly $6,000 more for the same workforce.
This is an illustrative example only. Texas allows employers to opt out of the state workers comp system (non-subscriber), which is a unique situation not applicable in other states. Actual premiums depend on carrier, underwriting review, and current filed rates.
Frequently Asked Questions
Is workers comp required for all employees?
Most states require workers comp for any business with one or more W-2 employees. A handful of states allow exceptions for very small employers (e.g., some states exempt employers with fewer than 3–5 employees in certain industries [verify state]). Sole proprietors and partners are often excluded by default but can elect to be covered. Independent contractors (1099) are generally excluded, but misclassifying employees as contractors is a major audit risk.
Does workers comp cover the business owner?
Sole proprietors and partners are typically excluded from coverage by statute but may voluntarily elect to be included. Corporate officers are usually covered automatically but may be able to exclude themselves in many states [verify state]. If you exclude yourself and later have a work-related injury, you have no coverage.
How does a payroll audit work at year-end?
Workers comp policies are written on an estimated payroll basis. At policy expiration, the carrier performs an audit — reviewing payroll records, tax filings (Form 941), certificates of insurance from subcontractors, and job classifications. If actual payroll was higher than estimated, you owe additional premium. If lower, you receive a refund or credit. Accurate upfront estimates reduce audit surprises.
Can I lower my workers comp rate?
Yes. The most effective levers are: (1) reducing claims frequency and severity to bring EMR below 1.0; (2) implementing a documented return-to-work program so injured employees return to light duty rather than collecting full indemnity; (3) ensuring employees are correctly classified — not over-classified into a higher-hazard code; and (4) shopping the market at renewal through an independent agent.
What does workers comp actually cover?
Workers comp covers medical expenses, lost wages (indemnity), and rehabilitation costs for employees injured or made ill in the course of employment. Most policies also include Employer's Liability (Coverage B), which covers employer negligence lawsuits not pre-empted by the workers comp statute — typically with limits of $100,000 per occurrence / $500,000 disease policy limit / $100,000 disease per employee.
Are 1099 subcontractors covered under my policy?
Generally, no — if the subcontractor is a legitimate independent contractor. However, if a subcontractor cannot provide a valid certificate of insurance showing their own workers comp coverage, most carriers will add their estimated payroll to your policy at audit and charge you accordingly. Always collect COIs from every subcontractor before work begins.
How is workers comp different from general liability?
Workers comp covers your own employees for work-related injuries — it is a statutory benefit system. General liability covers third-party bodily injury and property damage claims (e.g., a customer injured on your job site). The two policies do not overlap and most businesses need both.
What is a monopolistic state for workers comp?
In four states — Ohio, North Dakota, Washington, and Wyoming — workers comp coverage must be purchased exclusively from the state-run fund. Private carriers cannot write workers comp there. Employers operating in those states obtain coverage directly from the state fund; rates are set by the state, not negotiated with carriers.
Why Morrow for Workers Comp
- Independent agency, multiple carriers. Morrow places workers comp with a broad panel of admitted carriers and, where needed, specialty markets — so your account is shopped competitively at every renewal, not auto-renewed with one carrier.
- Class code accuracy from day one. Misclassified employees create audit surprises and overpayments. Morrow reviews your actual operations and confirms class codes before binding, not after.
- Fast certificates of insurance. Field crews can't start work without a COI. Morrow issues certificates same-day in most cases — including workers comp, general liability, and any endorsements required by the GC.
- Subcontractor COI management. We help clients track subcontractor insurance certificates so uninsured sub payroll doesn't blow up your year-end audit.
- Claims advocacy. When a claim occurs, Morrow works alongside you and the carrier to ensure injured workers receive appropriate care and claims are resolved efficiently — helping protect your EMR for future renewals.
Get a Workers Comp Quote
Ready to see what workers comp will cost for your business? Morrow compares rates across multiple carriers for your specific class codes and state.
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Related Resources
- Workers Compensation Insurance Overview
- Do Sole Proprietors Need Workers Comp?
- Do I Need Workers Comp for 1099 Contractors?
- What Is an Experience Mod and How Do I Lower It?
- How Much Does General Liability Insurance Cost?
- What Insurance Does a General Contractor Need?
Author: Content reviewed by a licensed commercial P&C insurance professional at Morrow (Afthonea Inc., DBA Morrow). Published: June 2026 Last updated: June 2026
Sources: - National Council on Compensation Insurance (NCCI) — class code and rate filings - National Academy of Social Insurance (NASI) — Workers' Compensation: Benefits, Costs, and Coverage report - Insurance Information Institute (III) — workers compensation statistics - U.S. Department of Labor, Office of Workers' Compensation Programs (OWCP) - State workers compensation rating bureaus (e.g., WCIRB in California, NYBCOICF in New York) - Ohio Bureau of Workers' Compensation, Washington State Department of Labor & Industries, North Dakota Workforce Safety & Insurance, Wyoming Department of Workforce Services (monopolistic state funds)