Workers Compensation And Temporary Staffing

By Lon Matejczyk

Here’s something to noodle on:

Whether the economic recovery is as robust as we think it should be or not, the cost of workers’ compensation insurance is expected to be a bigger issue in Colorado (and most likely elsewhere) as companies begin to hire more workers.

If you’ve tracked the numbers carefully, you’ll know that workers’ compensation insurance rates increased an average 3.7 percent in 2012 to cover rising medical costs and an increased number of claims.

That’s not bad but, in a recovering economy, bad enough, especially because workers’ compensation insurance rates in the previous decade were mostly flat.

Of course, some industries this year experienced higher percent increases than others.

Goods and services companies saw an average 4.8 percent increase in workers’ compensation insurance rates, according to the state. Contractors in construction-related industries saw an average 4.5 percent increase. Manufacturing companies saw an average 1.9 percent increase; office and clerical companies saw a 1.2 percent increase.

To calculate rates for each profession, insurance brokers use a job-classification table with rates set by the state. Those rates — as well as rate increases — are approved by the Colorado Division of Insurance after annual hearings with groups such as the National Council on Compensation Insurance Inc., a private industry group, and consultants.

Since workers’ compensation insurance rates for small businesses are calculated per $100 worth of payroll, the rate increases add up as payroll rises, said Tony Gagliardi, the state director of the National Federation of Independent Business, an industry trade group. That may keep companies from hiring new employees as quickly as they need to, Gagliardi said.

“It is an impediment,” Gagliardi said. “When you raise the cost of employment on anything like workers’ comp or unemployment taxes go up, companies are affected.”

Bottom line? This is definitely something to keep an eye on in the coming months. 

About the Author

Lon Matejczyk

Lon is the former publisher of the Colorado Springs Business Journal and Colorado Springs Military Newspaper Group.He has served in leadership roles at various newspapers in Iowa, Florida and Wisconsin. Lon received his Bachelor of Arts in Communications from the University of Wisconsin, Eau Claire and attended the Kellogg Graduate School of Management at Northwestern University. Earlier in his career, Lon spent several years as a sea captain and held a 100-ton Coast Guard license. Lon is a former rugby player, referee and administrator and now coaches under 13 year old kids. Lon has served on the boards of numerous community and business organizations including Colorado Springs Leadership Institute, Peak Venture Group, CS Quality of Life Indicators Business Index Committee, Junior Achievement and is a member of The Colorado Thirty Group.  Lon was given the “Making the Pikes Peak region a better place to live work and play” award by the CS Chamber of Commerce, was the VFW Post 1’s business citizen of the year.

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