Five Workers’ Compensation Tips for New Employers

By James M. Hoffmann  Jun. 26, 2014 11:57a

The acquisition of workers' compensation coverage is a major decision employers have to make. The cost of the coverage may be disproportionate and have a considerable effect on the cost of business for employers. The following are tips that new employers can consider to make the cost of coverage manageable.

I. Essential information

• The state sets the guidelines to follow when it comes to workers' compensation. Coverage is regulated by the state where the business is located.
• Find out if workers' compensation coverage is required by the state. The regulations associated with coverage will differ from one state to another. Missouri State requires businesses with at least five employees to obtain workers' compensation coverage. However, businesses operating in the construction sector are required to offer coverage even if they only have one employee.
• Check the computation of the workers' compensation premium. Generally, the premium is equal to the rate for each payroll multiplied by schedule credits or discounts offered. Workers' compensation policies are normally twelve-month contracts.
• Look for a professional agent. It is advisable to get the services of an experienced agent who focuses on workers' compensation. The workers' compensation coverage should be placed under an insurance company with a good reputation. The agent can also assist in selecting a payment plan that will allow employers to set a monthly expense budget.

II. Create a Job Description

• The classification of the business will be determined by the work the employees perform for the company. There are instances when businesses have numerous job classifications, like a contractor. There are around 700 classifications for workers' compensation. The majority of the payroll will determine the classification of the business since it offers the best representation of the business.

III. Classify the Payroll According to Job Class

• It is essential to remember that premium calculation is determined by the payroll multiplied by the rate for every 100 job classifications of the work performed by the employees. Since the "exposure basis" of workers' compensation policies is the payroll, it is important to be accurate in classifying the job classification policy. The premium of the policy period will be finalized following an audit and the account is balanced. The premium paid when the policy begins is not yet the final premium to be paid.

IV. Constantly Check the Payroll

• Continuously check the payroll the entire year. When you discover that the payroll appears to go beyond your initial projection in the middle of the policy period, get in touch with the agent and request for an adjustment on the payroll exposure.

V. Re-Assess the Workers' Compensation Audit

• Errors and inaccurate audits by insurance companies result in thousands of dollars in losses for a number of employers every year. These errors and inaccurate audits happen in a number of premium producing areas during the process of calculating workers' compensation. However, many employers are unaware of these mistakes.

These simple tips will allow employers to become informed before they have to obtain a workers' compensation policy for the business. Although workers' compensation is may be required by the state, there are established systems to check on expenses associated with workers' compensation.

If you have been injured on the job, contact an experienced St. Louis Workers Comp Attorney at theLaw Office of James M. Hoffmann. We would be happy to answer your questions regarding Missouri Workers' Compensation. Call (314) 361-4300 to speak with an attorney.