The same payroll dollar costs very differently to insure depending on the job’s inherent risk — and a specific employer’s own safety record shifts that cost further, up or down.
How it works
The manual premium is payroll divided into hundreds, multiplied by the classification rate for that type of work. The experience modification factor then adjusts the final premium based on the employer’s own claims history relative to their industry average.
What this does not include
Real payrolls often span multiple classification codes (office staff priced differently than field workers, for instance) — this calculator computes premium for a single classification and payroll figure at a time, not a blended multi-class calculation.
How to use this calculator
- Enter payroll for this classification and the classification rate per $100.
- Enter the employer’s experience modification factor.
A worked example
$500,000 payroll, classification rate $3.50 per $100 of payroll, experience modification rate (EMR) 1.0: manual premium = final premium = $17,500.
The same payroll and rate, but a better-than-average EMR of 0.85: final premium = $14,875 — a lower claims history directly reduces the premium.
What the variables mean
| Variable | Meaning |
|---|---|
| Payroll | Total payroll for the classification |
| Classification rate | Rate per $100 of payroll, based on job risk category |
| EMR | Experience modification rate — reflects the employer’s claims history relative to industry average (1.0) |
Edge cases worth knowing
An EMR below 1.0 lowers premium, above 1.0 raises it — it’s a direct multiplier on the base premium, which is why a strong safety record (lower EMR) translates into real, ongoing cost savings.
A negative payroll has no meaning, so the calculator declines to show a result for that input.
Frequently asked questions
What does an EMR below 1.0 mean?
A better-than-average claims history for the industry, which earns a premium discount — an EMR above 1.0 means a worse-than-average history and a surcharge instead.
Who sets the classification rates?
The National Council on Compensation Insurance (NCCI) in most states, reflecting the inherent injury risk of each specific type of work.
Can a business improve its EMR over time?
Yes — reducing claims frequency and severity over several years typically improves the EMR, lowering future premiums for the identical payroll and classification.
