Understanding Your EMR
An experience modifier rate (EMR) is a crucial safety metric for companies in the construction industry that uses the previous cost of injuries in the history of the company as an indication of future chances of risk. This metric is of high importance to employers because it determines both the premium employers will pay for workers’ compensation and the employer’s ability to bid on and retain contracts. Potential clients will examine the EMR of a construction company when selecting a company for their project. Additionally, companies with EMRs on the higher end of the spectrum may be considered high-hazard.
Therefore, it is imperative that you understand how your EMR is calculated, what impact your EMR will have on your company, and how you can work towards improving your EMR. In this brief article, a Greensboro contractor attorney from Cotney Attorneys & Consultants provides an overview on how EMR is calculated in The Tar Heel State and what you can do to improve your EMR.
How is EMR Calculated?
In simplest terms, EMR is the ratio of actual losses to expected losses over a rolling three-year period of claims data, typically excluding the most recent year. Depending on the state, EMRs are calculated and published annually by either a national or state rating board. North Carolina is one of the few states that has their rates computed and published by an independent bureau rather than the National Council on Compensation Insurance (NCCI).
The North Carolina Rate Bureau calculates ratings for employers with operations only in North Carolina; employers with multi-state operations may be subject to interstate experience ratings calculated by NCCI. The base premium for the company is calculated by dividing the payroll by one hundred, and then by a class rate. For example, a company with an EMR of .75 would have a workers’ compensation premium of $750,000. Ideally, the EMR is intended to accurately tailor the cost of workers’ compensation to the characteristics of the employer based on the employer’s past experiences.
How Does EMR Impact Your Company?
Your company’s EMR will fall into one of the three designations, provided by the Department of Defense:
- Superior: 0.40 – 0.70
- Acceptable: 0.70 – 1.00
- Sub-standard: 1.00 – 2.00
Although the EMR is not an indicator of a company’s safety efforts as a whole, it can still have a direct effect on the success of your company. Some states, for example, will not accept bids from those with an EMR higher than 1.00 or the acceptable range. Lower workers’ compensation costs provide a competitive advantage that is lost when the EMR climbs into the sub-standard category. The metric also acts as a general selection criteria during the procurement of contracts.
How Can You Improve Your EMR?
There are many methods for reducing the EMR of your company, however, the best practice is to aim for a reduction in workplace incidents and an improvement of safety practices on the jobsite. To begin, it’s important to examine the history of your company in terms of accidents and claims to determine the root cause behind any injury trends and identify opportunities for improvement. This will help you establish a more effective safety and health management program and/or system.
Additionally, it may be beneficial to set up a safety committee composed of both workers and supervisors to discuss jobsite safety and effective safety practices. It can be useful to approach the subject by providing ways in which you can reinforce key safety practices already in place that may have been brushed over or ignored. For more information about how to improve the EMR of your construction company, contact a Greensboro contractor lawyer today.
If you would like to speak with one of our Greensboro construction law lawyers , please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.