How Much Does Workers' Comp Cost in 2026?
Workers' compensation insurance costs range from $0.20 per $100 of payroll for office workers to more than $25 per $100 for high-risk construction trades. Your exact rate depends on industry, state, payroll, and claims history.
How Workers' Comp Pricing Works
Workers' compensation insurance premiums are calculated using a simple formula: your total payroll divided by 100, multiplied by your class code rate, then adjusted by your experience modification rate (EMR). The formula looks like this:
Premium = (Payroll ÷ 100) × Class Code Rate × EMR
For example, a restaurant with $300,000 in annual payroll, a class code rate of $3.00 per $100, and an EMR of 1.00 would pay approximately $9,000 per year. If that same restaurant had an EMR of 0.85 (better than average), the premium drops to about $7,650 — a $1,350 savings just from having fewer claims than the industry average.
Average Workers' Comp Costs by Industry
Your industry classification is the single biggest factor in your workers' comp rate. The table below shows typical rate ranges per $100 of payroll, sorted from lowest to highest risk:
| Industry | Class Code(s) | Rate per $100 | Example Annual Cost |
|---|---|---|---|
| Office / Clerical | 8810 | $0.20 – $0.50 | $500K payroll → $1,000–$2,500/yr |
| Retail Stores | 8380 | $0.50 – $2.50 | $150K payroll → $750–$3,750/yr |
| Restaurants | 9101/9080 | $1.50 – $4.00 | $300K payroll → $4,500–$12,000/yr |
| Healthcare | 8017/8031 | $1.00 – $3.00 | $600K payroll → $6,000–$18,000/yr |
| Janitorial | 9014 | $3.00 – $7.00 | $200K payroll → $6,000–$14,000/yr |
| Manufacturing | 3629/3365 | $2.00 – $15.00 | $400K payroll → $12,000–$30,000/yr |
| Landscaping | 0042 | $4.00 – $8.00 | $200K payroll → $8,000–$16,000/yr |
| Auto Repair | 8389/8393 | $3.00 – $8.00 | $250K payroll → $7,500–$20,000/yr |
| Trucking | 7219/7228 | $5.00 – $15.00 | $400K payroll → $20,000–$60,000/yr |
| Construction | 5403/5551 | $3.00 – $25.00+ | $500K payroll → $15,000–$40,000+/yr |
The 5 Factors That Determine Your Rate
1. Industry Class Code
Every job type is assigned an NCCI or state-specific class code that reflects the injury risk of that work. A clerical office employee (code 8810) has a fraction of the risk of a roofer (code 5551), so their rates differ by 50x or more. If your employees do multiple types of work, payroll should be split across the correct class codes — misclassification can mean drastically overpaying.
2. State
Workers' comp rates vary significantly by state because each state sets its own benefit levels, has its own rating bureau, and regulates premiums differently. States like California and New York tend to have higher rates due to higher benefit requirements, while states like Arizona and Utah tend to be more affordable. We're licensed in 23 states and shop carriers in each to find the most competitive rate.
3. Total Payroll
Your premium is directly proportional to your payroll — more payroll means a higher premium. This is why correctly classifying employees matters: if your office manager is accidentally classified under your construction code, you're paying 10-50x more than necessary for that person's coverage.
4. Experience Modification Rate (EMR)
Your EMR compares your actual claims history to the expected claims for businesses of your size and industry. An EMR of 1.00 is average. Below 1.00 means fewer claims than expected, earning you a discount. Above 1.00 means more claims, and your premium goes up. Over time, a strong safety record and claims management can significantly lower your EMR and your costs.
5. Claims History
Beyond the EMR calculation, carriers evaluate your raw claims data from the past 3-5 years. Frequency matters more than severity — multiple small claims can hurt your rate more than one large claim. A clean claims history opens the door to preferred pricing from top-tier carriers.
How to Lower Your Workers' Comp Costs
There are five practical strategies that can reduce your premium without reducing your coverage:
Shop multiple carriers. Workers' comp rates are not standardized — different carriers price the same risk differently. We submit your application to multiple A+ rated carriers simultaneously and present you with the most competitive options. This single step can save 10-30%.
Classify employees correctly. Ensure every employee is assigned to the right class code. If you have office staff, outside sales, and field workers, each group should be classified separately. Overpaying on misclassified employees is one of the most common — and fixable — problems we see.
Implement a safety program. A documented safety program with regular training and incident reporting shows carriers you're actively managing risk. Some carriers offer premium credits of 5-10% for certified programs.
Manage claims aggressively. Return-to-work programs, modified duty assignments, and quick reporting of incidents all reduce the total cost of claims, which improves your EMR over time.
Consider pay-as-you-go billing. Instead of paying a large estimated annual premium upfront, pay-as-you-go policies calculate your premium each pay period based on actual payroll. This improves cash flow and eliminates the surprise of an annual audit adjustment.
Find Out What You Should Be Paying
We shop multiple carriers to find the most competitive rate for your specific business.
Get Your Free Quote →Frequently Asked Questions
How much does workers' comp cost per employee? +
Workers' comp costs are calculated per $100 of payroll, not per employee. The average cost across all industries is roughly $1.00-$2.00 per $100 of payroll, but ranges from $0.20 for office workers to $25+ for high-risk construction trades like roofing.
What is the cheapest workers' comp class code? +
Class code 8810 (Clerical Office Employees) is the cheapest workers' comp classification, typically costing $0.20-$0.50 per $100 of payroll. A 10-person office with $500,000 in payroll may pay as little as $1,000-$2,500 per year.
How can I lower my workers' comp premium? +
You can lower your premium by shopping multiple carriers, ensuring employees are correctly classified under the right class codes, implementing a documented safety program, managing claims aggressively with return-to-work programs, and lowering your experience modification rate (EMR) over time through fewer claims.
Does workers' comp cost vary by state? +
Yes. Rates vary significantly by state because each state has its own rating bureau, benefit levels, and regulatory requirements. States like California and New York tend to have higher rates, while states like Arizona and Utah tend to be more affordable.
Is workers' comp based on payroll or revenue? +
Workers' comp premiums are based on payroll, not revenue. Your premium is calculated by multiplying your total payroll (per $100) by the rate assigned to your class code, then adjusted by your experience modification rate (EMR).