The basic formula
At its core, a New York workers’ comp premium is built like this:
(Payroll ÷ 100) × Class code rate × Experience mod = Modified premium
From there, the carrier applies any credits or debits, a minimum premium if the policy is small, and New York State assessments and surcharges. Each piece is explained below.
1. Payroll
Workers’ comp is priced per $100 of payroll, so payroll is the starting point. For each class code, the carrier estimates your annual payroll at the beginning of the policy and then checks the actual figure at audit.
What counts as payroll follows New York’s rating rules. It generally includes wages, salaries, commissions, bonuses, and holiday and vacation pay. It can also include payments to uninsured subcontractors and 1099 workers who don’t qualify as independent. Executive officer payroll is typically subject to minimum and maximum amounts set by NYCIRB each year.
Tip: Estimate payroll as accurately as you can. Underestimating lowers your deposit but leads to a bill at audit. Overestimating ties up cash until the audit refund.
2. Class code rate
Every class code has a rate per $100 of payroll. The rate reflects how often and how severely workers in that type of business get hurt. A clerical office code might carry a rate well under a dollar, while roofing or demolition can run many times higher.
In New York, rates are based on loss costs developed by the New York Compensation Insurance Rating Board and applied by each carrier, so rates for the same code can vary between insurers. That’s one reason comparing multiple carriers matters. See New York Workers’ Comp Class Codes to make sure you’re in the right one.
3. Experience modification factor (mod)
Your experience mod compares your claims history to other New York businesses in the same classifications. A mod of 1.00 is average.
- Below 1.00: Better-than-average history. A 0.85 mod means you pay 15% less.
- Above 1.00: Worse-than-average history. A 1.25 mod means you pay 25% more.
New York calculates mods through NYCIRB under its own experience rating plan. All employers with New York exposure during the experience period are eligible, and the mod applies to New York exposure only. Claim frequency tends to affect the mod heavily, so several small claims can hurt more than you’d expect.
4. Credits, debits, and minimum premium
Carriers may apply scheduled credits or debits based on factors like safety programs and management practices. Small policies are subject to a minimum premium, so a business with very little payroll may pay the minimum rather than the calculated amount.
New York construction employers who pay higher wages may qualify for the New York Construction Classification Premium Adjustment Program (NYCCPAP), which offers credits to eligible experience-rated contractors in certain construction codes.
5. State assessments and surcharges
New York adds assessments to workers’ comp policies to fund the state system. These appear as separate line items on your bill and are applied on top of your premium. They’re set by the state, so they’re the same no matter which carrier you choose.
A worked example
Here’s a simplified illustration using hypothetical numbers. Actual rates vary by carrier and change over time.
- Annual payroll: $300,000
- Class code rate: $4.00 per $100 of payroll
- Experience mod: 0.90
$300,000 ÷ 100 = 3,000 units of payroll
3,000 × $4.00 = $12,000 manual premium
$12,000 × 0.90 = $10,800 modified premium, before any credits and state assessments
Want to run your own numbers? Try our workers’ comp cost calculator.
Cost per employee
To find your approximate cost per employee, divide an employee’s annual pay by 100 and multiply by the rate for their class code and your mod. Using the example above, an employee earning $50,000 would cost about $1,800 a year in workers’ comp before assessments: ($50,000 ÷ 100) × $4.00 × 0.90.
New York employers can’t pass the cost of workers’ comp on to employees. It’s an employer expense.
How to lower your premium
- Get your class codes right, including clerical and outside sales exceptions where they legitimately apply.
- Keep payroll records separated by type of work so the auditor doesn’t default to your highest-rated code.
- Collect subcontractor certificates so uninsured sub payments don’t get added at audit.
- Report injuries quickly and bring employees back to work when safe. Fast reporting and return-to-work help keep claim costs, and your mod, down.
- Invest in safety. Fewer claims lead to a better mod and may earn carrier credits.
- Consider pay-as-you-go billing, which bases payments on actual payroll and reduces audit surprises.
- Shop the market. Rates for the same code can differ between carriers and the State Insurance Fund.
Frequently asked questions
Why did my premium change at audit?
Your initial premium is based on estimated payroll. At audit, the carrier recalculates using actual payroll, class assignments, and any uninsured subcontractor costs. See our audit guide for how to prepare.
What is a good experience mod?
Anything below 1.00 means your claims history is better than average for your classification, and you pay less than the base rate.
Can I deduct workers’ comp from employee paychecks?
No. In New York, workers’ comp is paid entirely by the employer.
See what you should be paying
Weinsurexyz compares multiple carriers and the State Insurance Fund, checks your codes and mod, and explains every line on your quote.
This article is general information. Examples use hypothetical figures; actual rates, assessments, and rules vary by carrier and change over time. Weinsurexyz is a division of Liability Advisors Inc., NY License #1810943.
