Recently, three employees of Pioneer Hydropower, Inc., a Massachusetts power company, were working alone in the Ware plant. As they worked, an electrical panel malfunctioned and arced. This caused an explosion that resulted in serious injuries to these workers. Investigators from the state fire marshal’s office determined that the cause of the accident was the result of human error or mechanical failure. The Massachusetts Department of Industrial Accidents stated that because the employees had workmans' compensation, their office would not conduct a deeper investigation.
This is just one example of the tens of thousands of workplace injuries that occur in this state each year. Most occupational injuries are minor and require little or no time off work, but each must be reported to the state. Employers are required by law to cover the treatment and lost wages their employees may incur because of an on-the-job injury, and that is why state law mandates that most businesses in this state carry workers' compensation insurance coverage.
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What Are Massachusetts Workers' Compensation Laws?
Every state has its own workmans' comp laws for employers that operate within its borders. Massachusetts workers' compensation laws state that all employers, with a few exceptions, are required to carry this insurance coverage for every employee of their company. Workers who are not considered employees and do not need to be covered include real estate agents, professional athletes, seamen, taxicab drivers, door-to-door salespeople, and independent contractors.
It is very important, however, that if you are excluding independent contractors from coverage, these workers meet the state’s legal definition of an independent contractor by meeting all three criteria. A local insurance professional who is familiar with workers' compensation laws can provide guidance if needed. Also exempt from mandatory coverage are sole proprietorships and limited liability partnerships that do not hire employees and employers who hire domestic help, provided that their workers put in fewer than sixteen hours of work per week.
How Does Massachusetts Workers' Compensation Work?
What Is Covered?
Workers' compensation insurance, or “workmans' comp” as it is often called, is designed to cover medical treatment of injuries and lost wages for employees who need to take time off to recuperate. It can also cover the very high expenses associated with major accidents like the one in Ware by covering long-term care, long-term disability, and loss of income. Fatal workplace injuries can be the result of serious accidents, workplace violence, or criminal acts by third parties. Regardless of how the accident happens, the families of workers killed in the course of doing their jobs are entitled to compensation. Workers' compensation insurance is designed to ensure a fair and timely payout to families and beneficiaries.
Who Is Covered?
Massachusetts workmans' comp covers both employees and employers. Employees don't need to worry about loss of income because of work-related injuries, and employers don't need to worry about facing unmanageable medical costs or liability lawsuits related to these injuries. By accepting settlements from your insurance company, your injured employees or their families can obtain the coverage and compensation owed to them, and they forfeit their ability to sue your business for negligence at a later date.
Of the three men injured in Ware, one was treated and released from the hospital the same day. Another man suffered more extensive injuries and was transferred by ambulance to a hospital in Worcester for additional treatment. The third man was the most seriously injured, sustaining second-degree burns over about 30% of his body. He was taken by helicopter to a burn center in Boston. The treatment of serious burns can require skin grafts, surgeries, and long-term treatment. Without a Massachusetts workmans' compensation insurance policy, the power company and the employees could have sustained massive financial losses.
Where Can You Buy Coverage?
Massachusetts has a private market for workers' compensation coverage. This means that you can buy this insurance from any private insurance carrier that is licensed to write a policy in this state. An independent agent can help match you up with a carrier that is well suited to your business and can help you find policy discounts when they are available.
How Much Does Massachusetts Workman’s Comp Cost?
Massachusetts differs from most other states in that it maintains its own independent rating bureau. The Workers Compensation Rating & Inspection Bureau of Massachusetts (WCRIB) assigns rates according to its own classification rules. The costs for this coverage are based on standard calculations that account for:
- The kind of business you operate, as indicated by your company’s MACI Class Code (for example, the power plant in Ware fell under the electric light and power category and had a class code of 7539)
- Your company’s total annual payroll
- Your company's assessed "experience mod"
Massachusetts Workers’ Compensation Base Rate Examples
In Massachusetts, the WCRIB assigns a minimum rate for each industry classification as indicated by its MACI Class Code, which in some cases differ from standard National Council on Compensation Insurance (NCCI) classification codes. Here are some sample base rates (rate per $100 of employer payroll) as of recent years. Keep in mind that these rates are subject to change each year.
- 0042 Landscaping: $4.09
- 5183 Plumbing: $3.45
- 5403 Commercial Carpentry: $11.00
- 8017 Retail Store: $1.07
- 8810 Clerical: $0.07
- 9079 Restaurant: $1.09
As you can see, it costs far more to insure workers in the construction industry, where injuries are commonplace and can be severe, than it does to insure office workers, who are far less likely to be injured on the job.
What Is an Experience Rating and How Does It Affect Your Costs?
In this state, companies are assigned an experience modification factor, or experience mod, which can affect your Massachusetts workers' comp premium. The experience mod can significantly affect how much you pay as you establish a claims history with insurance companies. Your experience mod provides an indication of how your workers’ compensation claims compare to other businesses of your size in your industry.
Your mod is determined by your actual losses as compared to the expected losses for companies in your industry. A higher experience mod will translate to higher premium rates. Not every business qualifies to be experience-rated, and eligibility requirements vary by state. In Massachusetts, a workers’ compensation experience rating is mandatory for employers with either:
- $11,000 in policy premium generated during the last year or last two years; or
- $5,500 average policy premium generated for more than two years.
If your workers' comp policy is experience-rated, your premiums are determined by the following formula:
- Base Rate X Payroll X Mod = Premium
Although Massachusetts has its own rating bureau independent of the NCCI, experience mods in this state are calculated according to the systems employed by the NCCI. Your mod represents a debit or credit that is applied to your workers’ compensation base premium.
- A mod of 1.0 is considered to be average and does not impact your rate. All employers start out with a mod of 1.0.
- A mod greater than 1.0 is a debit mod. This means that your losses were worse than expected, and you will pay a rate greater than your base rate.
- A mod less than 1.0 is a credit mod. This means your losses were better than expected, and your costs will be lower than your base rate.
Here are some examples of how your experience rating can affect your Massachusetts workers’ compensation premiums:
- Premium: $100,000
- Mod: 0.75 (25% premium credit)
- Premium with mod credit applied: $75,000
- Premium: $100,000
- Mod: 1.0
- Premium is not adjusted
- Premium: $100,000
- Mod: 1.25 (25% premium surcharge/debit)
- Premium with mod debit applied: $125,000
The best way to keep your workers’ compensation rates as low as possible is to control your mod. You can do this by taking measures to ensure worker safety. This can be done by instituting safety protocols and educating your employees about how they can avoid injuries while working. A good insurance company can assist you in this endeavor.
Get Help Securing a Massachusetts Workers’ Comp Policy
The power company in Ware was covered by an insurer that understands the risks faced by workers in the power industry. There are workmans' compensation providers who are especially well-suited to meet the demands of your particular business. Let an independent insurance agent help you find an insurance company that can provide the coverage you need while also offering resources to help you ensure the highest level of worker safety.
Contact an agent near you to learn more.