Workers' comp for restaurants: what you need and what it costs
A restaurant with employees needs workers' comp, and its price is set by the job codes your staff fall into, the payroll in each code, and your own claims record. Sit-down dining, fast food and bars each have their own code, and in most states traditional tips stay out of the payroll the premium is figured on. The final bill is settled after the policy year, when an auditor checks actual payroll.
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- You pay a price per $100 of payroll for each job code, multiplied by your own claims record once you are large enough to qualify.
- Drivers you employ, cash-paid helpers and teenage part-timers all count. Traditional tips usually don't; automatic service charges usually do.
- New York, Pennsylvania and Massachusetts use their own rating bureaus; Washington prices by the hour through a state fund.
Which class codes apply to a restaurant?
The rating system sorts every job into a numbered category — insurers call it a class code — and prices each per $100 of payroll. Most restaurants land in one of four codes, chosen by how the business runs as a whole.
Insurance that pays an injured employee's medical bills and lost wagesWorkers' Compensation Insurance that pays medical bills and lost wages when an employee is hurt or sick because of work. Insurers call it workers' compensation. is rated in most states by the National Council on Compensation Insurance. Its restaurant system dates to 1996 and has four codes: 9082 for sit-down restaurants and caterers, 9083 for fast food, 9084 for bars and nightclubs, and 9058 for restaurant staff of a hotel or motel. NCCI's data show fast food has more frequent claims, and sit-down and bar codes costlier ones. (Source: NCCI filing B-1452)
That system is being rewritten. NCCI's filing, proposed for policies starting on or after July 1, 2027 where states approve it, renames 9082 "full-service," moves fast-casual and ghost kitchens into 9083 and buffets into 9082, and folds drivers you employ into the restaurant codes.
New York, Pennsylvania and Massachusetts run their own bureaus with their own codes; see the state section below. Our workers' compensation coverage page explains what the policy pays for.
Who counts as an employee in my restaurant?
Almost everyone who works for you and takes your direction, whatever the paperwork says. An auditor adds back the people restaurants leave off.
- Drivers and cash-paid helpers: a 1099 for the delivery driver or cash for the weekend dishwasher doesn't make either a contractor. Getting that wrong is misclassification. (Source: U.S. Department of Labor)
- Tipped staff: where NCCI's manual applies, tips a customer chooses to leave are not payroll; since January 2024, automatic gratuities and mandatory service charges are. (Source: Business Insurance)
- Owners and officers: covered or not by your state's election rules, which differ — see the state section.
- Family members: a spouse or child on the payroll is an employee like anyone else, unless an owner election reaches them.
- Teenage part-timers: a 16-year-old host counts. Federal rules also bar 14- and 15-year-olds from most fryers and broilers. (Source: U.S. Department of Labor)
About to make your first hire? Read what changes when you hire an employee.
What drives the rate?
Payroll in each code, the base price for each code, and — once you are big enough — a multiplier built from your own claims. Kitchens produce many small injuries, and frequency moves that multiplier.
The base price is the rating bureau's average injury cost per $100 of payroll in your code; each insurer adds its expenses. Larger accounts then get a multiplier built from your own claimsExperience Modification Factor (E-Mod) A number, with 1.0 as average, that raises or lowers your workers' compensation price based on your claims compared with similar businesses. Insurers call it the experience modification factor., which insurers call the experience modifier: above 1.00 raises the premium, below 1.00 lowers it. Picture a sit-down restaurant with $400,000 of payroll, a made-up base price of $2.00, and an insurer that adds 25% to it for its own expenses.
| What happens | Amount |
|---|---|
| Your payroll in this job type is | $400,000 |
| Divided into $100 units ($400,000 ÷ $100) | 4,000 |
| The rating bureau's base price per unit, a made-up figure | $2.00 |
| Your insurer adds its own expenses and profit to the base price, here a made-up 25% ($2.00 × 1.25) | $2.50 |
| The premium before any modifier is (4,000 × $2.50) | $10,000 |
| With an average claims modifier of 1.00, you pay ($10,000 × 1.00) | $10,000 |
| With a modifier of 1.20, more claims than average, the premium becomes ($10,000 × 1.20) | $12,000 |
| With a modifier of 0.85, fewer claims than average, it becomes ($10,000 × 0.85) | $8,500 |
Illustration only, with round numbers, a made-up base price and a made-up expense load. It is not a statement of what any policy pays; your own policy wording governs.
NCCI's plan weighs how often you have claims more than how large they are: ten small losses predict higher future cost than one loss of the same total. (Source: NCCI)
What happens at the audit?
Your starting premium is an estimate. After the year ends, the insurer checks your actual payroll by code and bills or refunds the difference.
That check — the year-end payroll review — is where cash-paid helpers, 1099 drivers and service charges get found. The confirmed payroll also feeds your claims multiplier, which usually draws on your latest three years of payroll and losses. (Source: NCCI) Keep payroll by job title; our premium audit guide lists what the auditor asks for, and the restaurant quote checklist covers the split to have ready.
What changes by state?
Below is only the restaurant angle in each state; the full law for each state is on our Insurance 101 pages, and who must carry coverage is in restaurant insurance requirements by state. Kansas, Missouri, Louisiana and Maryland use NCCI's manual, so the codes and tip rule above apply. (Source: NCCI filing B-1452)
Cost levels are each state's share of the national median in Oregon's 2024 comparison, which prices the same mix of jobs everywhere. (Source: Oregon Department of Consumer and Business Services)
Kansas. A sole owner, partner or LLC member is outside the coverage unless they elect in. (Source: Kan. Stat. 44-542a) Cost: 83% of median.
Missouri. A corporation whose only employees are its one or two owners can file to withdraw from the law; the option ends when you hire anyone who isn't an owner. (Source: Mo. Rev. Stat. 287.090) Cost: 120% of median.
New York. The New York rating board sets codes and rates, so NCCI's 2027 rewrite doesn't apply. (Source: New York rating board) Officers are covered by default; a corporation with one or two officers who own all the stock can file to exclude them. (Source: N.Y. Workers' Comp. Law §54) Cost: 182% of median.
Pennsylvania. The state bureau uses its own numbers: restaurants 897 or 975, bars 899, caterers 898. (Source: Pennsylvania Compensation Rating Bureau) Its payroll rule counts the top-up to federal minimum wage for tipped workers, plus automatic gratuities, and excludes tips above that. (Source: Pennsylvania bureau manual, Rule V) Cost: 105% of median.
Massachusetts. The state's own bureau publishes its manual and class index. (Source: Massachusetts rating bureau) An officer or director owning at least 25% of the corporation may opt out only by filing a written waiver with the state. (Source: Mass. Gen. Laws ch. 152, §1) Cost: 89% of median.
Louisiana. NCCI codes and tip rule apply, and the 2027 rewrite arrives once the state approves it. Cost: 129% of median. (Source: Oregon Department of Consumer and Business Services)
Maryland. A paid corporate officer or LLC member is a covered employee; opting out requires meeting the statute's conditions and written notice. (Source: Md. Labor & Employment §9-206) Cost: 82% of median.
Washington. Unless you self-insure, coverage comes from the state fund at Labor & Industries, priced per hour worked rather than per $100 of payroll. Restaurants and taverns share class 3905, at a 2026 base rate of about 51 cents an hour. (Source: Washington L&I) Cost: 123% of median.
Common questions about workers' comp for restaurants
No. The package that bundles your liability and property coverage does not include workers' comp. It is a separate policy, often with a different insurer, with its own renewal and audit.
It covers your employee's own injuries. Damage to the car and injuries to the other driver are generally handled by business auto coverage, which needs to reach staff cars used on deliveries. Check your own policy wording and ask your agent.
Not by itself. The code follows the business as a whole: a restaurant that pours drinks usually stays in a restaurant code; a business that is mainly a bar goes in the bar code. If sales have shifted toward drinks, raise it before the audit.
Check your restaurant's workers' comp codes and payroll
Send us your payroll by job title and the codes on your current policy, and we'll tell you whether they match how your restaurant actually runs.