Restaurant Risk Management: 5 Tips for Trimming Workers’ Comp Insurance Cost

While workers’ compensation premiums have decreased for some industries, many restaurants have seen increases of 30% to 40% in certain locations. The good news? Workers’ comp costs are one of the most controllable expenses in your business. Here’s how to manage them effectively.

Key Factors Influencing Workers’ Comp Pricing
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Workers’ comp premiums are determined by:

• Your payroll – Higher wages mean higher premiums.
• Industry classification (9079) – This rate has increased in many states. Some insurers may further divide 9079 based on specific risk factors.
• Your experience modification (X-mod) factor – This reflects your restaurant’s claim history compared to industry peers.

Mandatory increases in minimum wage, along with stiff competition for top talent, are putting upward pressure on restaurant payrolls. Since workers’ comp pricing is a function of payroll, a larger payroll means higher workers’ comp premium.

In contrast, the X-mod factor is within your business’s control. It reflects your history — how your specific restaurant performs. 

Your X-mod is a benchmark comparing your claims history to others in the industry. A mod of 1.0 is average, while anything above means higher claims and costs. A lower X-mod can reduce your premiums significantly. Your X-mod is calculated based on a three-year rolling history, meaning past injuries still impact your current rates.

Hiring, training, safety practices, and the way you handle workers’ comp claims are within your control. As part of your restaurant risk management strategy, here are five actions you can take today to reduce your X-mod factor.

1. Implement Best Practice Safety Programs

Start by assessing current safety programs and reviewing past claims. The most common restaurant injuries include:

• Slips, trips, and falls – Often due to wet floors, improper footwear, or cluttered walkways.
• Lifting and pushing injuries – From moving heavy items without proper technique or assistance.
• Cuts and burns – Frequent in kitchens due to sharp tools and hot surfaces.

To reduce these risks:

• Conduct regular walkthroughs to identify hazards.
• Implement simple fixes like installing drains, adding floor mats, or repositioning equipment.
• Develop a written injury prevention program and make safety training a priority.
• Use signage and visual reminders to reinforce safety protocols.

2. Manage Workers’ Compensation Claims Proactively

The way you handle claims can significantly affect costs. Key actions include:

• Report injuries within 24 hours – Delayed reporting leads to higher costs and prolonged recovery.
• Ensure employees receive immediate care – Your insurer may offer a triage service to determine appropriate treatment.
• Thoroughly document incidents – Witness statements, photos, and timely reports help with claim resolution.

Show Support for Injured Employees

Employees may fear losing their job after an injury. Reassure them by:

• Accompanying them to medical evaluations to offer support.
• Checking in during recovery to show care and maintain engagement.
• Monitoring claims closely to ensure timely care and prevent delays.
• Providing clear return-to-work expectations so employees feel secure about their job status.

Proactive communication reduces litigation risk and improves employee morale.

3. Train Employees Continuously

Inadequate training contributes to workplace injuries. Ensure training is:

• Engaging and hands-on – Use real-life scenarios and simulations.
• Accessible – QR codes on equipment can link to instructional videos.
• Collaborative – Experienced employees can mentor new hires.
• Ongoing – Reinforce training regularly, not just during onboarding.
• Tailored to actual risk areas – Focus on the most common injury types in your restaurant.

Training does not have to be costly—consistent reinforcement of safety best practices can have a lasting impact.

4. Develop Return-to-Work Programs

Lost workdays drive up claim costs. Implement return-to-work strategies by:

• Informing medical providers that modified roles are available.
• Assigning temporary tasks like greeting guests, assisting with office work, or training employees.
• Leveraging state programs that provide financial incentives for returning employees in limited roles.
• Creating meaningful transitional duties that provide value to the business while accommodating recovery.

When an employee returns, celebrate their recovery and use the experience to refine workplace safety protocols.

5. Leverage Workers’ Comp Data and Technology

Use data to identify trends and reduce claims by analyzing:

• Claim reporting times – Faster reporting leads to better outcomes.
• Injury frequency and severity – Determine if injuries are increasing and why.
• Risk patterns – Identify problem areas, such as slippery floors or equipment misuse.
• Employee behavior trends – Address patterns that lead to repeat incidents.
• Comparisons with industry benchmarks – Assess how your claims compare to competitors.

For example, if multiple employees are slipping, evaluate whether the issue is the flooring material, cleaning methods, or footwear requirements. Data-driven insights lead to targeted safety solutions.

Foster a Culture of Safety

Workers’ comp trends often reflect an organization’s culture. Consider:

• Employee fatigue – Are workers juggling multiple jobs and working while exhausted?
• Staffing shortages – Overworked employees are more prone to injury.
• Hiring for safety – Employees who care about their work and colleagues tend to act more cautiously.
• Encouraging a speak-up culture – Employees should feel comfortable reporting hazards before they become incidents.
• Providing incentives for safety participation – Recognizing employees for identifying risks can reinforce a proactive culture.

Creating a culture that prioritizes safety improves morale and significantly reduces workers’ comp costs. By taking these proactive steps, restaurants can control their premiums and create a safer, more productive workplace. | ​Robert J. Hoover, Vice President, and Christina Capobianco, Loss Control Consultant

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This guest blog was submitted by Rob Hoover of Risk Strategies Fournier Group. Rob manages ORLA’s Hospitality Insurance Program (HIP) and can be contacted via email. For more information on guest blog opportunities, contact Marla McColly, Business Development Director, Oregon Restaurant & Lodging Association.