Executive Summary: Many estimators do not understand how workers’ compensation, general liability, and bond costs are calculated. This article discusses these calculations and how to properly include them in your bid.
Workers’ Compensation (WC): Most contractors understand the reason for WC – the reason for WC is to provide wages and medical benefits to an employee injured on the job.
The biggest misunderstanding regarding the cost of WC is how it applies to your labor. WC rates apply to the activity, not the labor class. So, for example, the cost of a laborer sweeping the inside of your jobsite trailer is much less than when that same laborer is dangling off the 30th floor of a building erecting structural steel. The person, and his/her classification of pay, are the same; it’s the WC rate that differs because the WC rate is paid based on the risk of the activity being performed.