Learn about EMR Rating problems and solutions for contractors and construction industry operations


What is an EMR Rating? – A question we are asked quite often. EMR is an acronym that stands for Experience Modification Rate. You’ll find other abbreviations for this workers compensation term are; EMOD, MOD, XMOD or just plain Experience Rating. This workers compensation term refers to the experience modification rating adjustment of a contractors workers compensation policy.

Where can you find your EMR Rating? – Another frequently asked question. Your EMR factor may be found on your workers compensation policy in the premium calculation area. You may also contact:

  • Your Insurance Agent – They should be able to provide you with your current EMR. Your agent should also be able to help if you are asked to provide documentation about your EMR.
  • Your State Rating Bureau –This is the organization that produces your EMR. Also known as an Advisory Organization you will find the Rating Bureau is responsible for developing and maintaining the workers compensation and experience rating rules for your state, of course as approved by your individual state’s legislature. Use this link to Rating Bureau Directory where you can Find Your States Rating Bureau.

What is considered documentation of your EMR? – When you are asked to provide documentation or proof of your EMR they are usually asking that you provide them with a copy of your EMR worksheet. This is a document usually provided to you once a year by your state rating bureau. If you can’t find it you may start by asking your insurance agent to get a copy for you or you may contact your state rating bureau direct and ask that a copy be sent to you. Sometimes they charge for replacement copies. Acceptable documentation may sometimes be in the form of a letter provided by your insurance company written on their letterhead indicating your EMR Rating.

These are typical questions about EMR Rating that we are asked by contractors who may be just beginning to bid on job or contract work. But for the seasoned construction operation this is old hat! The EMR Rating has become a very important part of qualifying for certain bid work. Many contracts that are let for bid will have strict qualification guidelines that accompany the bid packet. Most will indicate some type of minimum acceptable EMR Rating in order to even submit a bid.

For employers who operate in the construction industry this workers compensation rating factor has become a very important tool in being able to secure and maintain bid contracts for work! Maintaining control of the EMR has become of the utmost importance. Understanding the experience rating system and learning how claims, payroll and classification codes impact the development of the EMR cannot be understated. For detailed information on the Experience Modification Rates, to learn about the individual rating elements that go into the generation of an EMR or to learn how this factor is calculated be sure to visit our Experience Modification Rate page found on our website.

On this page you will learn about the EMR Rating for construction operations and contractors; why it’s important; it’s affect on construction contracts and contract bids; problems associated with high or out of control EMR’s and solutions available to improve and regain control.

Problem – The EMR (Experience Modification Rate), Government and Private Contracts –

State and Federal construction contracts will typically include a requirement of a bidding contractor to provide documented proof of their EMR. Many contract or bid solicitations will require that an EMR be provided for the past three years where it will be used to develop some sort of average. An EMR over 1.0 may, in many circumstances, disqualify a contractor from bidding on government projects. It all started sometime in the mid 1990’s when it was determined that the EMR should be considered a factor in consideration of safety evaluation of a construction operation or contractor. Contrary to it’s real purpose the EMR has now found its way into almost every government contract. Federal, State and Local contracts issued by bid will almost certainly make some reference to the EMR.

Examples of recent state government construction contracts or bid pre qualification requirements where the ERM plays a role:

  • Tennessee – 2014 Contract being bid for construction of a welded steel plate girder bridge – Prequalification requirements of the contract indicate “The prime contractors must provide documentation on the most recent three (3) years experience modification rate or EMR. The average EMR over the last three (3) years shall be less than 1.25.”
  • Kentucky – Knoxville Utilities contractor pre qualification statement must “List your firms EMR for the last 3 years and provide documentation.”
  • Connecticut – Department of Administrative Services, DAS, contractor pre qualification program indicates that a contractor “must submit a copy of your current experience rating worksheet from NCCI.”
  • Maine – Department of Transportation – Contractor Safety Questionnaire – “contractor must provide a copy of the last 3 years EMR on the insurance carriers letterhead or provide the NCCI worksheet as documentation.”
  • Missouri – Bidders Statement of Qualifications for the University of Missouri – requires a contractor to provide documentation of the last 3 years EMR.

Government agencies who bid projects, construction or procurement, will have some method in place to evaluate the safety record of a bidding contractor. This evaluation will almost certainly include a review of OSHA accident forms along with a review of the EMR rating of a prospective contractor. Most agencies will have some type of pre qualification application that a contractor will have to complete and be processed prior to bidding on a job. Contractor prequalification requirements will often dictate the level of acceptable Experience Modification Rates required not only to bid a project but to maintain other existing contracts.

Examples of Federal and State Government Agencies that reference the EMR through instruction contract solicitation guidelines or statute:

  • The Federal Acquisition Regulation, FAR – The Federal Acquisition Regulation are a set of rules found within the Federal Acquisition Regulation System. Established under Title 48 of the United States Code of Federal Regulations. The purpose of FAR is to develop and implement uniform acquisition policies and procedures to be used in solicitation and procurement of contracts for services needed. For an Offeror, the bidding contractor, to be awarded a contract on a bid they must comply with the provisions as outlined by FAR and in the bid solicitation developed by the individual agency seeking services. You will find that FAR contains many standard provisions and specific contract clauses that are used by those individual agencies in development of their bid solicitations.FAR does not specifically make reference to a contractors EMR but you will find under FAR 9.104-1, General Standards, specific reference to safety programs and proper control systems. It reads like this:
    • “To be determined responsible a prospective contractor must…(e) Have the necessary organization, experience, accounting and operational controls and technical skills…including as appropriate…quality assurance measures and safety programs applicable to materials to be produced or services to be performed by the prospective contractor and subcontractors.”

    It is from this section of FAR that many contracting agencies have taken and ran with. It is this section that dictates to an agency soliciting services that they must consider safety in making bid awards. Most have then developed some type of safety evaluation system to use that will include, in some fashion, the EMR.

  • State of California Code 4420 – Code 4420 states that prospective bidders meet minimum safety and health qualifications to bid on a project and that evaluation of prospective bidders be based on consideration of….”(B) the contractor’s or subcontractor’s workers compensation experience modification factor.” A direct reference to the inclusion of the EMR in consideration of a bid award.
  • Department of Defense – The Department of Defense provides to its contracting officers various guides to follow for solicitation of contract work. One of these guides is titled the Best Practices for Optimizing DOD Contractor Safety and Occupational Health Program Performance. As a reference, this link will take you to a PDF of this DOD guide. The DOD provides, in this guide, some key elements to follow in contractor selection. You will find that one category is titled Safety Criteria in which the guide indicates that:
    • “Contract Solicitations and Requirements Documents should require the contractor to provide documentation that demonstrates their safety and health program experience. Examples of documents to use, among others: 

      • “Experience Modification Rate (EMR) for the past five (5) years.

    This DOD Best Practice Guide goes on to indicate under the Evaluation of Safety Criteria Section that an EMR for a prime contractor is considered:

    • Superior – with a rate of .7 or below
    • Acceptable – with a rate of .7 to 1.0
    • Sub-Standard – with a rate greater than 1.0

It is pretty clear that various government agencies have picked up on the idea that the EMR, Experience Modification Rate, can be used as a form of safety indicator and implemented that idea into their bid solicitation processes. Whether or not you agree that this is a proper use of the EMR you must come to a realization that it has been adopted by many organizations just for that use.

Bid Protests –

Once a bid solicitation has been awarded to a contractor other bidding contractors have the opportunity to protest the bid through a review system established by the GAO.

You will find there has been an increase in bid protests filed with the Government Accountability Office, the GAO, where the Experience Modification Rate, EMR, has played a part in the denial of bid awards. Perhaps, not the single reason for denial, but one that has certainly played a part. Detailed information regarding Federal bid protests can be accessed at the GAO website.

Examples of Federal bid protests that in some way or other involved the EMR:

  • Griffy’s Landscape vs US Government – 3-2-2000 Court Case– Lack of EMF in bid proposal – challenge evaluation of bid asserting the Army improperly failed to award it points for a past-performance factor because of absent insurance information
  • Cherokee Chain Link Construction Inc. – 1-3-2014 – B408979 Denial of bid protest – Offeror was unable to provide 3 years EMR because they did not qualify for EMR as premium level
  • Dependable Disposal and Recycling – 2-3-2009 – B400929 Evaluation of EMR by Navy – Offeror argued that Navy used data provided on EMR for evaluation and not just the EMR number along with other items. Protest was denied.
  • IAP World Services Inc. – 7-10-2013 – B40797.2-.7 Regarding the safety factor offerors were instructed to provide EMR for three prior years and that lower EMR rates would carry a higher evaluation weighting.
  • OER Services, LLC – 10-7-2011 – B405273 EMR as a part of safety evaluation – Denial of this bid protest was that the offeror did not submit enough detailed information regarding their safety evaluation.

You may look at the increase in bid protests as another indicator the EMR has on the entire contract bid process. We’ve reviewed many cases where the Offeror, or biding contractor, has failed to meet the standard lined out in bid solicitation requirements, who have submitted a bid protest only to have the protest denied. The weight placed on safety, safety experience and proper documentation of contractor safety cannot be underestimated.

Private Construction Contracts –

You will find Contractors who operate within the private sector also find themselves faced with Experience Modification Rate or EMR issues when it comes to securing bid contract work. It is not unusual at all to find that project owners will structure private sector contractor qualifications similar to those being used in the government sector. Large construction project owners have a concern about the safety of all contractors working on their project. Many have adopted safety evaluation factors that include an examination of bidding contractors:

  • OSHA Accident History;
  • OSHA Safety Logs;
  • OSHA Violations;
  • Current Workers Compensation EMR;
  • Historical Workers Compensation EMR.

These are just a sample of the type of safety related information you will find now being used to evaluate prospective bidder safety qualifications.

Just because a contractor has shifted from working in the government sector to private does not mean they can avoid the ever present EMR!

Solution – How To Control A Construction Company or Contractors EMR –

Now that we’ve established the importance through example the EMR carries in most construction contract situations lets examine what a construction company or contractor can do to gain and maintain control over this workers compensation rating factor.

There are different levels of sophistication when it comes to construction operations and contractors. Some construction operations are very large, organized and have controls in place within their business structure for a variety of issues. For these companies it is not unusual to find individuals within their organization who have been tasked with maintaining and monitoring company safety programs. It’s usually within these departments that you will find an individual with the experience and technical skills to monitor the workers compensation experience modification rate or EMR for the contractor. These types of operations will typically have gained control over their EMR through properly designed and implemented safety programs.

For small contractors establishing control becomes more of a task. Faced with fewer resources, the small contractor may have an uphill battle gaining and maintaining control. When internal help may not be available, outside consultants can step in and provide assistance.

Let’s examine some key points and prevailing factors that influence a construction company EMR:

  • Workers Compensation Claims – By far the most significant factor involved in the development of a contractors EMR are the claims or losses that are incurred during the experience period. To gain control over the EMR, claims must be controled and controlling claims begins with an active safety program designed around a contractors available resources.
  • Workers Compensation Classification Codes – The use of correct class codes is a must in development of a correct EMR. Construction operations typically have a very complicated interaction of class codes on their workers compensation policy. Each code used brings with it specific rating elements used in the EMR calculation. Just remember this, Wrong Codes = Wrong EMR!
  • Audited Payroll (Remuneration) – Payroll, developed during the experience period, is multiplied by rating factors carried on the class codes which results in the expected losses for the contractor. Incorrectly applied payroll will produce an incorrect EMR.

There are others but these are the three big factors used in developing a contracting operations EMR. To gain and maintain control then is to actively manage each of these factors. Let’s take them one at a time a see what an employer can do.

  • Workers Compensation Claims –
    • Safety Program – Stop claims before they happen! Designing and implementing an active safety program is the first place to start gaining control over workers compensation claims. A safety program should include a safety manual adopted and followed by all employees, development of an active safety committee with employee involvement, recognition training and use of proper safety gear, inspections of work place environments and active accident investigation program.
    • Claims Management Program – Claims management begins as soon as a workers compensation claim is reported. Timely reporting of a claim to the workers comp carrier or insurance company will ensure that the injured employee is afforded the medical attention ultimately leading to a quicker return to work. When a claim is reported the insurance company will assign an adjuster to the case. A claims management program should include a written claim reporting procedure, active employer involvement, establishment of a return to work program and a method of claim activity follow-up.
    • Independent Claims Review – An independent claims review is an important part of any claim management program. Improper payment of non-compensatory claims and overpayment of proper claims will lead to a higher EMR. An independent, outside source should be used to provide a detailed claims analysis which should include, when deemed necessary, a complete claim file review. Be sure to contact an independent Workers Compensation Consultant to provide this service.
  • Classification Codes –
    • Independent Classification Code Review – The use of proper descriptive classification codes on a contractors policy carries the utmost importance not only from the development of a correct premium but also from the development of a correct EMR. Individual class codes carry specific rating factors used in the EMR calculation. The informed contractor will have an independent classification code review performed on their work processes. Verification of correct codes must be a part of any EMR control program.
  • Workers Compensation Payroll Audit –
    • Independent Audit Review – It is a contractors payroll audit information that is reported to the rating bureau by the workers compensation insurance company that is used in developing the EMR. The audit provides rating payroll used on the policy and assigned classification codes assigned to the contractor. Incorrect payroll assignment to incorrect class codes will result in an incorrect EMR. Many times rating payroll will be shifted from code to code at audit time so it is very important to have all audits reviewed by an independent outside workers compensation consultant for accuracy.

Wrap Up and Review –

There are two primary problems a contractor or construction operation has with the EMR when it comes to bidding on construction contracts. They are:

  • The ability to bid on a contract;
  • And the ability to maintain a contract that has been awarded.

Do not underestimate the influence the EMR may have on the solicitation of a construction contract. Since the mid 1990’s the EMR has played an ever increasing part in the evaluation of a construction companies ability to provide a safe work environment for their workers. Coupled with other safety indicators such as OSHA safety logs and OSHA issued violations the EMR is now used as a tool in qualifying a contractor for bid work. Government and private construction contracts can be complicated. Pre-qualification of a contractor will almost certainly include some reference to the Experience Modification Rate or EMR. Contractors with a low EMR will have an edge up on others. For a construction company gaining and maintaining control of their EMR has never been more important!


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