Workers’ compensation insurance is a necessary cost. Many practice leaders assume this cost is fixed, but several factors can influence rates that could be quietly eating into the clinic’s bottom line.
Three behind-the-scenes factors can significantly increase your workers’ comp insurance costs, resulting in over-payments of up to $20,000 per year. Let’s break down how claims, overtime, and 1099 contractors impact veterinary workers’ compensation and how partnering with VSS can help you avoid these pitfalls.
1. Injury claims
Veterinary medicine is physically demanding. Team members lift heavy patients, crawl on the floor, and handle anxious or fearful pets who are armed with teeth and claws. Working long hours in these conditions increases the likelihood of injuries. However, one workers’ compensation claim can increase insurance costs.
Your veterinary workers’ compensation premium is based on payroll and claims history. Insurers use something called an experience modification rate (EMR) to measure the riskiness of your business compared to others in the same industry.
Every practice starts with an EMR of 1.0, which represents the industry average. If you’ve had fewer injuries or claims than expected, your EMR falls below 1.0, and your premiums go down. If you’ve had more claims than average, your EMR rises above 1.0, and your premiums go up.
For example, if your EMR is 1.10, that means you’re paying 10% more for workers’ comp insurance than a similar clinic with fewer claims. That doesn’t seem like much, but it can add up. Depending on your state, a base premium may run $5,000 to $10,000 for every $100,000 of payroll. If your practice has $1 million in payroll, a 10% increase due to injury claims can add $5,000 to $10,000 every year.
Injuries often occur among team members who are overtired or overextended. Relief staffing from VSS can ensure your core team gets the breaks they need to stay safe and can help to limit workers’ comp premiums.
2. Overtime
Overtime is a short-term solution that may have long-term costs. Veterinary workers' compensation premiums are partially based on total payroll, including overtime. Every extra hour of time-and-a-half increases insurable payroll and, therefore, premiums.
Additionally, overtime contributes to fatigue, which leads to mistakes and injuries. Tired employees are more likely to slip, lift incorrectly, or miss signs that a pet is about to bite. If your staff is overextended, it may be time to consider a relief coverage strategy.
3. 1099 contractors
Relief team members can provide regular team members the help they need to reduce burnout and limit workers’ comp claims, but hiring them as 1099 contractors can create other issues. Misclassifying these workers can increase your veterinary workers' compensation costs.
A 1099 contractor is responsible for their own taxes and insurance, including workers’ compensation. But if that person functions like an employee—they follow your schedule, use your equipment, and work under your supervision—then they likely meet the legal definition of an employee.
This gets confusing, and if something goes wrong, your practice could be held liable. When a relief worker without private workers’ comp insurance gets injured on the job, you could face:
