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Scott Walker, Governor
Raymond Allen, Secretary

Department of Workforce Development
Secretary's Office

201 E. Washington Avenue
P.O. Box 7946
Madison, WI 53707-7946
Telephone: (608) 266-3131
Fax: (608) 266-1784
Email: sec@dwd.wisconsin.gov

Thursday, June 19, 2017
CONTACT: DWD Communications, 608-266-2722
On the Web: http://dwd.wisconsin.gov/news/
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On Twitter: @WIWorkforce

Safety Pays in Worker's Compensation

June is National Safety Month

June is National Safety Month, and companies throughout Wisconsin are working to raise awareness of important safety issues and educating individuals about injuries that can occur both at home and at work. We all understand the moral importance of ensuring safety at work, something Wisconsinites take great pride in as demonstrated by Wisconsin's long history as an innovator in protecting employees and rewarding safety.

One such innovation was the creation of the nation's first constitutional Worker's Compensation system. Worker's Compensation was created after representatives of both labor and management agreed to a "Grand Bargain" where employers agreed to carry workplace injury insurance for employees and employees gave up their right to sue in court, which provided employers protection against expensive legal proceedings. Under the system businesses not only have an ethical incentive to keep their employees safe, they have a financial incentive to ensure a safe work environment.

This financial incentive is referred to as an experience modification rate (EMR). In general, a company's insurance costs are determined by the classification of an employee multiplied by the amount of wages paid. The EMR is designed to financially reward companies with a safe work history and minimal incidents by reducing their premiums.

An average company with an average safety record would have an EMR of 1.00. Companies with a better than industry average accident rate earn an EMR of less than 1.00. Conversely, companies with poor accident experience resulting in increased injury and illness costs earn an EMR greater than 1.00. A company then takes their EMR times their base insurance rates to determine their final premium. So, if a company has an EMR of .75, they would receive a 25% discount on their rates, a serious savings for safe employers. Here is an example of how the premium calculation would work:

Premium Modifaction Factor Modified Premium
$100,000 1.25 $125,000
$100,000 1.00 $100,000
$100,000 .75 $75,000

Accident and injury prevention is key and offers the best safety return on investment. An accident or injury prevented saves everyone and does not negatively impact a company's bottom line. To learn more about safety week, including printing additional materials and statistics, visit the National Safety Councils website or visit the US Department of Labor's website promoting Safe and Sound Week.