Whether your company is eligible for experience rating is determined by a number of factors. To determine eligibility, payroll developed during the experience period is totaled by classification code. These totals are multiplied by the expected loss rate for each classification that applies as of the effective date of the experience modification. The sum of these calculations must equal or exceed the minimum eligibility threshold. (Prior to January 1, 2016, advisory pure premium rates were used instead of expected loss rates.)
Experience Rating Eligibility Threshold
Example 1 – Does NOT Meet Eligibility Threshold
The eligibility threshold is adjusted annually to ensure the population of experience rated employers remains somewhat stable. The threshold can be found in Section III, Rule 1 of the California Workers' Compensation Experience Rating Plan—1995 (ERP). The expected loss rates can be found in Table 1 of the ERP and in the Filings and Plans section of this website.
In the table below, Employer 1 does not qualify for experience rating because the eligibility value ($6,683) is below the eligibility threshold of $10,200.
Experience Modification Effective: September 1, 2022
| Classification Code | 2019 Payroll | 2020 Payroll | 2021 Payroll | Payroll Total | Expected Loss Rate (per $100) | Eligibility Value |
|---|---|---|---|---|---|---|
| 8017 | 138,965 | 189,900 | 220,468 | 549,333 | $1.16 | $6,372 |
| 8742 | 56,426 | 68,921 | 78,235 | 203,582 | $0.10 | $204 |
| 8810 | 41,569 | 43,536 | 48,536 | 133,641 | $0.08 | $107 |
| $6,683 |
Example 2 – Qualifies for Experience Rating
In the second example below, Employer 2 does qualify for experience rating because the eligibility value ($14,149) is above the eligibility threshold of $10,200.
Experience Modification Effective: September 1, 2022
| Classification Code | 2019 Payroll | 2020 Payroll | 2021 Payroll | Payroll Total | Expected Loss Rate (per $100) | Eligibility Value |
|---|---|---|---|---|---|---|
| 8017 | 211,777 | 199,592 | 771,869 | 1,183,238 | $1.16 | $13,726 |
| 8742 | 92,109 | 95,551 | 100,551 | 288,211 | $0.10 | $288 |
| 8810 | 49,233 | 55,566 | 64,555 | 169,354 | $0.08 | $135 |
| $14,149 |