This workers’ comp premium calculator estimates your annual workers’ compensation cost from three numbers carriers actually use: your annual payroll, the class-code rate per $100 of payroll, and your experience modification factor (EMR). The core formula is Premium = (Payroll ÷ 100) × Rate × Experience Mod. Enter your figures below to see both the manual premium (before your mod) and the modified premium you actually pay.
Workers’ compensation premium is built up in a predictable order. The carrier starts with your payroll, applies a rate tied to your job classification code, then adjusts for your loss history with an experience modifier. The base formula is:
| Step | Calculation | Example |
|---|---|---|
| 1. Payroll units | Annual payroll ÷ 100 | $500,000 ÷ 100 = 5,000 units |
| 2. Manual premium | Units × class rate | 5,000 × $2.50 = $12,500 |
| 3. Modified premium | Manual × experience mod | $12,500 × 1.00 = $12,500 |
| 4. Final premium | + expense constant, taxes, credits | $12,500 + fees |
Rates are quoted per $100 of payroll, which is why a $2.50 rate on a $500,000 payroll produces a $12,500 manual premium. A clerical class code might be rated under $0.30, while roofing or logging codes can exceed $15.00 per $100.
A class code is a 4-digit number (e.g., NCCI code 8810 for clerical office employees, 5645 for residential carpentry) that groups jobs by injury risk. The National Council on Compensation Insurance (NCCI) maintains the system in most states; a handful of states (California, New York, Pennsylvania, and others) run independent bureaus with their own codes and rates. Each code carries a filed rate; higher-risk work carries a higher rate per $100. Misclassifying employees into a cheaper code is a common audit finding and can trigger back premium plus penalties.
| Type of work | Typical rate per $100 |
|---|---|
| Clerical / office (8810) | $0.10 – $0.40 |
| Restaurant (9082) | $0.80 – $2.50 |
| Carpentry (5645) | $5.00 – $12.00 |
| Roofing (5551) | $8.00 – $25.00+ |
Rates vary widely by state and year — use your carrier’s declarations page or NCCI for the exact filed rate for your code and state.
Suppose a small construction firm has $400,000 of carpentry payroll (code 5645 at $7.00) and $120,000 of clerical payroll (code 8810 at $0.30), with an experience mod of 0.95:
Because each class code is rated separately, splitting payroll accurately between codes matters: putting the carpenters’ wages in the clerical code would understate premium by tens of thousands of dollars and is exactly what an audit catches.
The number this calculator returns is an estimated annual premium, the same kind of figure on your policy’s declarations page. Workers’ comp is then audited at year-end: the carrier reconciles estimated payroll against actual payroll by class code. If you paid more wages than estimated, you owe additional premium; if less, you get a refund. Keeping clean payroll records by class code — including how you split overtime and bonuses — is the single best way to avoid an unpleasant audit bill.
Premium = (annual payroll ÷ 100) × class-code rate × experience modification factor, plus any expense constant, taxes, and schedule credits or debits. Rates are quoted per $100 of payroll, so $500,000 of payroll at a $2.50 rate produces a $12,500 manual premium before your experience mod is applied.
A class code is a 4-digit number that groups jobs by injury risk and sets the rate per $100 of payroll. NCCI maintains the codes in most states, while California, New York, Pennsylvania and a few others use independent rating bureaus. Clerical code 8810 is rated far lower than high-risk codes like roofing.
In most states only the straight-time portion of overtime wages is counted toward workers' comp payroll — the extra 'half' of time-and-a-half is excluded if your payroll records break it out separately. Rules vary by state, so confirm with your carrier or state bureau.
The experience modification factor (EMR) multiplies your entire manual premium. A mod of 1.00 is average; 0.85 cuts premium 15%, while 1.20 adds 20%. Reducing claims frequency and severity lowers your mod over time, which is one of the few levers that compounds across every class code on the policy.
Workers' comp premium is estimated up front from projected payroll, then audited at year-end against actual payroll by class code. If you paid more wages than estimated — or misclassified workers into the wrong code — you owe additional premium; if you paid less, you receive a refund.