What would not be considered in a Workers' Compensation experience modification calculation?

In the context of Workers' Compensation experience modification calculations, the amount of employee payroll is not a direct factor. Experience modification rates are primarily based on the frequency and severity of claims relative to the industry and the employer's historical experience with claims. The calculation focuses on the number of workplace injuries, the nature of the work performed, and the duration or loss time resulting from those injuries.

While payroll may indirectly influence insurance premiums, it does not directly factor into the experience modification rate, which is specifically designed to assess the risk based on claims history rather than the financial capacity of the business as indicated by payroll amounts.

The number of workplace injuries reflects how many claims have been filed, which significantly impacts the experience modification rate. The type of work performed is essential because different industries carry different risk levels, which will influence the calculation. Likewise, the duration of employment provides insights into employee retention and potential risks associated with longer-tenured employees who might be more susceptible to injuries due to repetitive tasks or workplace familiarity. Hence, those factors are all considered in this calculation, while payroll amounts are not.