The Ohio Bureau of Workers’ Compensation (BWC) will cut the cost of the average premium rate for private employers by 20 percent. This is the largest single reduction in almost 60 years and follows the 12 percent reduction in premiums approved last year.
Stephanie McCloud, administrator/CEO of BWC, said, “We’re pleased to continue the trend of falling rates with a reduction that will save Ohio private employers more than $200 million next year.” These are, she said, the ninth reduction in workers compensation rates in Ohio since 2008.
BWC has been able to reduce rates because medical costs have risen a slower rate than expected, as well as because of improvements in workplace safety across the state. “We’re pleased Ohio employers recognize that workplace safety is vital to the health of their workforce, their businesses, and our state’s economy. Their efforts to promote safe and healthy workplaces are clearly paying off, and they’re making it easier for us to maintain low and stable workers’ compensation rates now and into the future,” explained McCloud.
A reduction in workers’ compensation premiums will be a lifeline to many businesses struggling to make ends meet. I’ve reported on businesses across the country which have misclassified employees or misreported payroll in order to reduce their workers’ compensation premiums or even to avoid paying them altogether.
For example, business owner Craig Snee misclassified his semi truck drivers as office workers and underreported payroll to avoid paying $350,000 in workers’ compensation premiums. At trial, Snee’s lawyer explained that Snee had “a pressure to find a way” to keep his business afloat and not lay off workers. Snee was found guilty of a fourth-degree felony.
Vanessa Arreguin of West Palm Beach misreported the payroll of her company to avoid paying $51,000 in premiums. She faces up to 20 years in jail.
Workers comp rates vary dramatically from state to state, from an average low of $0.82 per $100 of payroll in North Dakota to an average high of $3.08 in New York. If rates are high, it can make running a business difficult. “It’s been a real hardship,” said Linda Rice, a horse trainer in New York, as she reflected on the cost of the workers’ compensation insurance required to cover her jockeys, grooms, and other employees. “It certainly makes it unattractive for people who want to come in and build a business here.”
The reduction of 20 percent represents the average change statewide. It can vary considerably depending on the business—different occupations attract different premiums—the premium for an office worker will be considerably lower than that of a building contractor. Other factors which may alter a company’s rates include their enrollment in rebate programs run by BWC as well as their claims history.
The new rates were approved on 22 February and will come into effect on 1 July. Over the course of fiscal year 2019, the reduced rates are estimated to cut $244 million from the premiums of private employers.
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