Workers’ compensation insurance premium amounts are not as simple as paying a flat fee every month. When it comes to calculating workers’ comp, there are a several factors that come into play. Some of these factors are outside of the businesses’ control, such as state-regulated rates and fees, and the industry in which the business falls. Every industry and job type are given a “class code,” which is based on the amount of risk that that job or industry has. However, some factors are within the company’s control, one of which is payroll. Companies with larger payrolls will pay more in premiums, as workers’ comp insurance is typically priced at a certain rate per every $100,000 in payroll. Companies can make choices about how many total employees to have (fewer employees means lower workers’ comp costs) and/or how many high-paying employees to have (fewer high-paying jobs, such as supervisors, can reduce costs as well). Companies can also find ways to reduce their experience modification rate, a rating given to companies designed to reflect the company’s level of overall safety. An experience modification rate of 1.0, or a unity rating, means that the company has an average level of safety compared to similar companies in that industry. A unity rating also means that the company receives neither a discount nor a penalty against its premium. In other words, the rate remains the same as the standard rate for that industry. An experience modification rate (or mod rate), of less than 1.0 is called a credit. This rating means that the company has an above-average level of safety, and thus has fewer workers’ comp claims over time. As a result, the company receives a discount on its premium. This can act as a powerful incentive for companies to create a safer workplace. A mod rate of greater than 1.0 is called a debit, which means the company has a below-average level of workplace safety, as a result the company may pay extra to account for it. This debit mod effectively acts as a penalty to companies who have more workers’ comp claims than their industry average, indicating a risky workplace or one in which proper safety training is not given to employees. In either case, the debit mod is used to create a reverse incentive for companies to spend more time and resources to create a safer work environment.