How Much Should You Really Be Paying for Workers Comp in the Cleaning Industry?

May 5, 2025

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How Much Should You Really Be Paying for Workers Comp in the Cleaning Industry?

The cleaning industry has grown into a vital part of the economy, supporting homes, businesses, and industrial operations worldwide. As a cleaning business owner or manager, you might already know how important it is to protect your employees. Workers’ Compensation insurance isn’t just a legal requirement in most states — it’s a shield for your business, your finances, and your people. But one question echoes louder than others: How much should you really be paying for workers comp in the cleaning industry? The truth might shock you, and understanding the nuances could save you thousands of dollars every year.

Understanding Workers’ Compensation Basics in the Cleaning Industry

Before diving into costs, it’s crucial to understand exactly what Workers’ Compensation insurance covers. In its simplest form, Workers’ Comp provides wage replacement and medical benefits to employees injured on the job. In return, employees typically relinquish their right to sue their employer for negligence. This legal tradeoff is meant to protect both parties and ensure a smooth path to recovery and resolution.

For cleaning companies, the risks of workplace injuries are real and varied. From slips on wet floors to chemical burns, and even repetitive stress injuries from constant movement, the hazards are abundant. Insurers calculate premiums based on these risk factors — which is why cleaning businesses often face higher Workers’ Comp rates compared to low-risk industries like IT or consulting.

What Drives the Cost of Workers Comp in the Cleaning Sector?

The cost of Workers' Compensation insurance isn’t one-size-fits-all. Several factors intertwine to determine your final premium. To understand what you should be paying, you must understand how these elements impact your cost.

The biggest influence is your industry classification code. Insurance companies use these codes, standardized by the National Council on Compensation Insurance (NCCI) or other bodies, to categorize the risk level of your business. For cleaning companies, common codes include 9014 for janitorial services or 9170 for residential cleaning operations.

Another major driver is your experience modification rate (EMR). This score compares your company’s claim history to the industry average. If your cleaning business has fewer claims than the average, you get a discount. If you have more, your premium spikes dramatically.

Your payroll also plays a critical role. Workers’ Comp premiums are usually calculated per $100 of payroll. So, a higher payroll means a higher premium, even if your risk remains the same.

Other considerations include the state you operate in, as each has different workers' comp regulations and base rates, and your loss history, meaning how many and how severe your previous claims have been.

The Hidden Costs Cleaning Businesses Often Overlook

Many cleaning companies make the mistake of assuming the quoted premium is the only cost involved. However, several hidden costs can dramatically increase what you end up paying.

One hidden cost comes from audits. Because premiums are based on estimated payroll, insurance companies conduct audits at the end of the policy period. If your payroll grew during the year, you’ll owe a hefty additional premium.

Another hidden cost lies in misclassification. If your employees are wrongly categorized under a higher-risk code, you’ll pay more than necessary. Conversely, improper low-risk classifications can lead to steep penalties during audits.

Claims also have a long-lasting financial impact. Even one moderate claim can increase your EMR for years, meaning you’ll be paying inflated premiums long after the injury occurred.

The Average Cost of Workers Comp in the Cleaning Industry

So, what’s the real number you should expect? Based on industry data, the average Workers’ Comp premium for cleaning businesses ranges between $2.00 and $6.00 per $100 of payroll. However, this wide range means some businesses could be paying far more than they should.

For a small cleaning company with a $250,000 annual payroll, premiums might range from $5,000 to $15,000 annually. Larger operations with a payroll above $1 million might be looking at $20,000 to $60,000 or more each year, depending on all the influencing factors mentioned earlier.

Location matters immensely. A cleaning business in California or New York will likely pay far more than a similar operation in Texas or Florida due to state laws, base rates, and insurance market competitiveness.

Why Some Cleaning Companies Pay Way Too Much for Workers Comp

Many cleaning business owners unknowingly overpay for Workers’ Comp because they fail to shop around. Insurance rates can vary wildly from carrier to carrier. If you’re sticking with the same insurer year after year without comparing quotes, you’re probably paying more than necessary.

Others pay too much because they aren’t managing claims effectively. A poor safety culture leads to more claims, and more claims mean a higher EMR and skyrocketing premiums.

Some businesses inadvertently accept errors from insurance companies. Studies show that about 60% of Workers’ Comp policies contain some type of error, whether from misclassification, wrong payroll estimates, or other mistakes.

How to Calculate Your Ideal Workers Comp Cost

The best way to determine what you should be paying starts with a simple formula:

Premium = (Rate per $100 of Payroll) x (Total Payroll ÷ 100) x (Experience Modifier)

For example, if your payroll is $500,000, your rate is $4.00 per $100, and your experience modifier is 0.85 (indicating better-than-average performance), your premium would be:

$4.00 x ($500,000 ÷ 100) x 0.85 = $17,000 annually

Using this basic formula, you can get a ballpark figure. If your actual premiums are far above this, it’s time to investigate why.

Smart Strategies to Lower Your Workers Comp Costs

First and foremost, invest heavily in safety training. A well-trained workforce that knows how to prevent injuries will result in fewer claims and a better EMR over time.

Regularly review your classification codes and make sure they accurately reflect your operations. Auditing these codes can save thousands each year.

Encourage early reporting of injuries. Studies show that injuries reported quickly are cheaper to resolve, and workers are more likely to return to work sooner.

Implement a strong return-to-work program. Getting injured employees back to work in light-duty roles reduces claim costs and demonstrates a commitment to employee welfare.

Finally, work with a Workers’ Comp specialist who understands the cleaning industry. They can negotiate better rates, identify hidden errors, and help manage claims proactively.

What to Watch Out for When Buying Workers Comp Insurance

When you’re shopping for coverage, don’t just look at the bottom-line premium. Pay attention to deductibles, coverage limits, and carrier reputation for claims service.

A cheaper policy that’s hard to use when you actually need it isn’t a good deal. Likewise, beware of policies that require large upfront deposits or have confusing terms that can trap you later.

Always get multiple quotes and make insurers compete for your business. Make sure brokers understand the cleaning industry’s unique risks, from chemical exposure to ergonomic injuries.

The Role of Workers Comp Brokers in Finding You the Best Rates

The right broker can make or break your Workers’ Comp cost structure. Brokers who specialize in cleaning businesses know which carriers are most competitive and what underwriters are looking for.

They can also help with claims management, loss control strategies, and audits. Rather than seeing the broker as just a middleman, think of them as a strategic partner in controlling your insurance expenses.

If you don’t currently have a broker with cleaning industry experience, it’s worth seeking one out before your next renewal.

Understanding State-Specific Differences in Workers Comp Costs

Every state regulates Workers’ Compensation differently, and understanding your state’s laws is critical to budgeting correctly.

For instance, California has some of the highest rates in the nation, in part due to litigation and fraud concerns. Florida, by contrast, reformed its system in the 2000s and has seen lower rates since then.

In monopolistic states like Ohio, North Dakota, Washington, and Wyoming, you must buy coverage through a state-run fund. Rates there are generally lower but come with fewer options for customization.

Knowing your state’s rules can help you better predict costs and avoid compliance pitfalls.

Future Trends: What Will Happen to Workers Comp Rates in the Cleaning Industry?

Experts predict that Workers’ Comp costs in the cleaning industry will continue to evolve. Several factors will influence future premiums.

Automation and the use of robotics in commercial cleaning could reduce injury rates, leading to lower premiums. On the other hand, increased regulation around chemicals and ergonomics might drive rates higher.

Medical costs are also expected to rise, which will impact claim payouts and eventually premiums. However, new technologies like telemedicine could streamline injury treatment and reduce downtime.

Proactively adapting to these trends — by adopting new technology, improving safety, and focusing on employee health — will be essential to controlling costs over the next decade.

The Shocking Truth About Workers Comp: It’s More Controllable Than You Think

Most cleaning business owners view Workers' Comp as a fixed cost, something to accept and move on. The truth is far different.

The smartest companies see Workers’ Compensation as a controllable expense, just like any other part of their operations. Through strategic safety investments, smart hiring, proactive claims management, and aggressive auditing, they take charge of their premiums and stop leaving money on the table.

Every dollar saved on Workers’ Comp drops directly to the bottom line. In an industry where margins are often thin, this can mean the difference between struggling to survive and thriving.

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