Bars, pubs and restaurants are busy places, with employees working hard to keep customers happy and business running smoothly. While you do your best to keep your employees safe and effective at their jobs, there are inherent risks all around them. From bunched up carpets and slippery bar mats, to broken glass or sharp kitchen tools, employees have a lot to watch out for.
So, what happens when one of your hard-working employees hurts themselves while doing their job? You fix them up and take care of them the best you can. A good workers comp policy will help you do just that.
What is Workers Compensation Insurance?
So then, what is workers’ comp?
It is important to be able to take care of your employees when they get hurt on the job. At the same time, it is important to protect your business from the risk of workplace injury expenses. This is exactly why you need workers compensation insurance (also known as workers comp).
Workers Comp pays for any expenses related to your workers/employees injuring themselves on the job. It helps pay for both medical costs and lost wages costs resulting from on-the-job injuries.
Why Does My Restaurant, Bar or Pub Need Workers Comp?
While it might not be as risky as laying shingles on a steep roof, working at a restaurant or bar also has its risks. Your employees encounter hourly all risks associated with running a food and beverage service business. (Think knives, electric currents, slip and trip hazards, customer hazards, and open flames.)
Moreover, if your bar or restaurant is in the business of brewing or distilling, you will have an additional set of risks to consider. For example, your employees may frequently engage in handling pressurized equipment or lifting heavy objects.
If your employee gets hurt while working in your restaurant, or brewing/distilling, you will not only need to pay for their medical expenses but also, will need to fund their rehabilitation and lost wages. Workers comp companies often have staff and established programs to not only help with covering costs but also to help employees get back to work faster.
Why Does Workers Comp Cost More for My Industry?
Restaurants, pubs and bars are not in the most expensive industry category for workers comp insurance (that designation usually goes to roofing companies and high rise construction). However, they are in a riskier industry than say office workers or most professional settings. As a result, your bar or pub workers’ comp premium payments will be higher than if you were insuring an accountant’s office where the biggest risks are staplers and copy machines.
The National Council on Compensation Insurance (NCCI) has over 800 different classification codes for various business types and industries that insurance companies use to help them price their insurance premiums for various types of workers and employees. It is important to understand your company’s class code(s). Note that you may also have more than one. If you are concerned or confused, an insurance agent will be able to help you understand what codes your business needs to use.
For example, “Bars and Breweries” fall under Class Code 9084, while “Restaurants” fall under 9082. Typically, if a business derives 50% or more of its revenue from the sale of alcohol, then it falls under the Bar code 9084. As you might expect, the bar code is usually a bit more expensive than the restaurant code.
Also, note that a few states do not follow all the NCCI class codes, and may have their own codes depending on if they are independent or monopolistic states for workers comp. You can see a map of where your state falls here.
It is a good idea to compare a few different insurance companies’ prices for your particular industry, as they will not all be the same. Insurance carriers often specialize in different industries. As a result, one company may have a better price and/or a better program for your type of business.
How are my Workers’ Comp Costs Calculated?
To start, insurance company actuaries calculate all insurance premium costs by considering all possible risks that could cost your business money. Their job is to find a reasonable premium payment to cover the costs of insuring your business’ risks.
In addition, workers’ comp costs are calculated based on your business’ industry codes and how many hours of labor you accrue in each of your codes. As mentioned, riskier industries have higher workers comp costs, and bigger companies will have higher costs with more hours worked.
You can either calculate and report your employee hours and workers comp costs to your insurance carrier on a scheduled basis, or often, you can sign-up for a “pay as you go” workers comp program.
What is a Workers Comp Audit?
Since workers comp is dependent upon what class codes you use in addition to your payroll, insurance companies will often have to make sure you are paying the correct amount for your premiums. A workers comp audit makes sure your company is paying what it needs to ensure correct coverage. The insurance carrier will have an auditor check on your actual payroll numbers, your codes used and any other factors (such as experience ratings or discounts) to make sure you paid the right amount.
What sometimes happens is that you will estimate your workers comp needs at the beginning of the year, but then as the year progresses you get busier than expected. Then, when an audit occurs, if you had more hours worked, you will end up having to pay more to make up the difference. Companies can get around having to use an audit with a real-time reporting option such as a “pay-as-you-go” program.
What is “Pay as You Go” Workers Comp?
“Pay-as-You-Go” workers’s comp insurance programs are popular options for companies in more expensive NCCI industry classifications. These programs allow companies to pay for their workers comp as they use it. Since workers comp is directly tied to hours worked for labor intensive industries, the real time reporting of hours and premium payments can be useful. The insurance companies sometimes partner with third party payroll companies to offer the real time auditing, pay-as-you-go option. Additionally, some insurance companies offer their own internal payroll processing options.
“Pay As You Go” and Workers Comp Audits
Also, pay-as-you-go options often eliminate the need for workers’ comp audits because the insurance company already knows the company’s payroll and hours worked. Audits can be time consuming and expensive for the insurance companies, as well as for the businesses they insure. As a result, pay-as-you-go can allow carriers to offer discounts on their premium prices in addition to saving everyone time.
How Can I Find a Workers Comp Policy for My Restaurant, Bar or Pub?
To find a competitively priced workers comp policy with the most effective coverage for your business, we suggest talking to an insurance professional. An independent insurance agent will help you to compare the best programs and policies for your bar or restaurant. The right insurance company or policy will depend on the size of your business, your payroll needs and your industry codes.
An independent insurance agent can also answer your questions on whether a traditional policy or a pay-as-you-go policy would best meet your needs. Finally, even if you have a policy in place, it is always a good idea to get a second look at your workers comp to make sure you are fully and efficiently covered at the best price possible.
In summary, having the best workers comp insurance policy in place for your restaurant, pub or bar is just another way to make sure your business is protected and profitable. Our team is here to help.