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Workers Comp Tax To Some Employers? – Shocker!


Is There Really A Workers Comp Tax?

A Workers Comp tax is something that many people in Human Resources and Accounting Departments have to consider overall.

Graphic of man pulling heavy wrecking ball workers comp tax on his feet

The subject of a Workers Comp tax comes up each year as today is the end of our tax filing season.  I always try to write something on premiums being viewed as a tax this time of year.   The postman just picked up all of our tax forms (whew!).

Are Workers Comp premiums a tax? The main consideration is how the employer views the payouts.   It is shocking to me (hence the title) that employers still just cut the check with so many areas of assistance available.

If a company or organization considers premiums just a cost of doing business, then it is nothing more than a percentage of the payroll tax. This is a big mistake and one of the reasons this article and blog have been written for almost 10 years.

In fact, as a Chartered Financial Consultant (ChFC) I view Workers Comp premiums as an investment.  My analyses looks at the premiums as a zero-based investment.   If a company is just cutting checks then they have given up on any types of cost savings that are available.

One of our old slogans is/was “Stop just cutting checks.”   At least read your Workers Comp policy and premium audits as a beginning to analyzing how your company is faring with your WC budget.

scissor cutting paper taxes workers comp tax concept

The simplest way to start reducing Workers Comp is with a general safety plan.   A claim is a loss.   Once a claim occurs the only strategy left is to reduce the costs, which we have specialized in for over 20 years.   The old and true saying is a claim that never occurs will always be the largest cost reduction – plain and simple.

Your Third Party Administrators or carriers usually have an endless amount of information on cost savings.  If not, there are free organizations such as the North Carolina Safety Conference that provide free or low cost safety training.

Other Incentives For Safety To Avoid Workers Comp Tax

One of the main incentives to cut costs with a safety program is the Schedule Rating Factor.   An example of a Schedule Rating chart is here.   Notice many of the cost reductions are directly related to safety.

A Workers Comp tax does not exist on paper.   It usually exists in boardrooms, C-Level executive offices, and in the safety and risk management departments.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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