Workers' Compensation
Insurance

Delaware requires all employers with one or more employees to carry workers' compensation insurance. The Delaware Department of Labor enforces compliance: an uninsured employer can be assessed a civil penalty of up to three times the premium it should have paid, plus $10 per employee per day (at least $250 per day) if it does not comply after notice, and it remains liable for injured employees' benefits. Delaware workers' compensation classifications and rates are developed by the Delaware Compensation Rating Bureau (DCRB). Coverage rules for owners differ by state: Pennsylvania does not require sole proprietors or partners with no employees to carry coverage, Delaware covers sole proprietors and partners only if they elect coverage, and corporate officers can be excluded only by following each state's specific procedure. Ask us before you file any exclusion.

Pennsylvania requires most employers to provide workers' compensation coverage. The Pennsylvania Workers' Compensation Act applies to virtually all employers and employees, including part-time workers. Pennsylvania uses its own rating bureau, the Pennsylvania Compensation Rating Bureau (PCRB), rather than NCCI. Penalties for non-compliance include criminal misdemeanor charges, fines up to $2,500 per day, and imprisonment. Corporate officers may exempt themselves by filing a written notice with their insurer.

New Jersey mandates workers' compensation for all employers regardless of the number of employees. The New Jersey Compensation Rating and Inspection Bureau (NJCRIB) oversees classification and rating. New Jersey has no minimum employee threshold, even businesses with a single part-time worker must carry coverage. Penalties for non-compliance include fines of $5,000 for the first ten days and $5,000 for each additional ten-day period, plus criminal prosecution.

Maryland requires employers with one or more employees to carry workers' compensation through a licensed insurer (including Chesapeake Employers' Insurance Company) or through self-insurance approved by the Maryland Workers' Compensation Commission. Employers who fail to secure coverage can be fined up to $10,000, charged with a misdemeanor, and responsible corporate officers can be personally liable for the fine. Corporate officers and LLC members may elect to exclude themselves but must complete the proper filing.

Virginia requires workers' compensation for employers that regularly employ more than two full-time or part-time employees, and the Virginia Workers' Compensation Commission oversees compliance. Corporate officers, LLC managers, family members, and seasonal, temporary, and part-time workers all count toward that number, and Virginia does not accept waiver or opt-out forms. An employer that is required to carry coverage and does not can be assessed a civil penalty of up to $250 per day, up to $50,000, and remains liable to injured employees for their benefits.

Your experience modification rate (EMR or e-mod) is the single most impactful factor in determining your workers' compensation premium. The EMR compares your actual claims history against the expected claims for businesses of your size and industry. A new business with no claims history receives an EMR of 1.00. Businesses with fewer claims than expected receive an EMR below 1.00, resulting in premium credits. Businesses with more claims than expected receive an EMR above 1.00, resulting in premium surcharges.

For example, a construction company in Pennsylvania with a 0.85 EMR receives a 15% discount on its workers' compensation premium, while a company with a 1.25 EMR pays 25% more than the base rate. Over three to five years of clean claims history, a business can significantly reduce its workers' compensation costs through experience modification improvement.

Class codes are four-digit numerical codes assigned by NCCI (or the PCRB in Pennsylvania, or the NJCRIB in New Jersey, or the DCRB in Delaware) that categorize employees by the type of work they perform. Each class code has a corresponding base rate per $100 of payroll. Office clerical employees (class code 8810) have very low rates because their injury risk is minimal, while roofing contractors (class code 5551) have among the highest rates because of the inherent danger of the work. Accurate class code assignment is essential, misclassification can result in overcharges during the policy term and significant audit adjustments. Prominent Insurance Services reviews your operations to ensure every employee is correctly classified, potentially saving your business thousands of dollars annually.

Every workers' compensation policy in Delaware, Pennsylvania, New Jersey, Maryland, and Virginia is subject to an annual premium audit. At the beginning of your policy period, your premium is calculated based on estimated payroll figures. At the end of the policy period, the insurance carrier audits your actual payroll records to determine whether you owe additional premium or are entitled to a refund.

During the audit, the carrier examines your payroll records, tax returns (941s and W-2s), certificates of insurance for subcontractors, independent contractor agreements, and overtime records. In Delaware, Pennsylvania, New Jersey, Maryland, and Virginia, overtime premium pay, the portion above straight time, is excluded from the auditable payroll. Subcontractors without their own workers' compensation coverage are typically added to your payroll for audit purposes, which can significantly increase your final premium.

To prepare for a smooth workers' compensation audit, maintain clean payroll records separated by employee classification, collect certificates of insurance from every subcontractor before they begin work, and keep accurate records of overtime hours. Prominent Insurance Services provides pre-audit consultation to help you organize your records and avoid unexpected audit adjustments. Our appointed carriers offer online audit submission tools that streamline the process.

Implementing a formal return-to-work program is one of the most effective strategies for controlling workers' compensation costs in Delaware, Pennsylvania, New Jersey, Maryland, and Virginia. A return-to-work program provides injured employees with modified or light-duty assignments that allow them to remain productive while recovering from a workplace injury. Studies consistently show that employees who return to work quickly, even in a limited capacity, have better medical outcomes and lower total claim costs.

Key elements of an effective return-to-work program include a written policy communicated to all employees, designated light-duty positions identified in advance, a relationship with an occupational medicine provider, regular communication between the employer and the injured worker, and an appointed carrier return-to-full-duty timelines. Carriers like our carrier partners and more than 20 appointed carriers offer return-to-work program templates and loss control resources to help employers build effective programs.

Subcontractor management is another critical area of workers' compensation risk management. In Delaware, Pennsylvania, New Jersey, Maryland, and Virginia, if a subcontractor does not carry their own workers' compensation insurance, the hiring contractor becomes responsible for covering that subcontractor's employees. This means uninsured subcontractor payroll is added to your workers' compensation audit, increasing your premium. Always verify that subcontractors carry active workers' compensation coverage with adequate limits, and keep current certificates of insurance on file. Prominent Insurance Services can help you establish a subcontractor verification process that protects your business from uninsured subcontractor exposure.