A Guide to Restaurant Workers’ Comp Insurance

Smiling chef standing behind a plate of food in a restaurant
By: 
Mordechai Kamenetsky
May 24, 2024
Last Updated: 
December 28, 2022
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Those who work in the restaurant industry know that there are plenty of potential risks in the workplace.

Although the front of the eatery might present a calm, pleasant experience for the guests, the kitchen, storage areas, loading docks, etc. are another story entirely. It’s in these locations where injuries tend to occur more often.

Of course, that’s not to say that employees couldn’t be injured out in the dining area, as well.

What does Restaurant Workers’ Compensation Insurance cover?

injured restaurant employee

Accidents, whether they are small or major, can cause serious issues for restaurant owners, managers, and employees.

When people are injured, they often aren’t able to come to work, which means missed days and the need to have other employees cover their position.

These injuries cost time and money. Naturally, you need to have high-quality workers’ compensation coverage to protect yourself and your employees.

However, when you are choosing policies, you need to be sure you are opting for the right coverage.

Below, you will find the most pertinent information you need to keep in mind.

Know the Restaurant Codes

It is important to understand that there are essentially three types of restaurants when discussing restaurant workers’ compensation insurance.

  • 9082 — Restaurant NOC (Not Otherwise Classified): This is the code that is used for most restaurants unless another code describes them better. These are eateries that have wait service along with a good-sized seating area.
    However, if your restaurant makes more than 50% of its income from alcohol, the classification code will be 9084. This might apply to a tavern that serves food but makes most of its income from alcohol sales.
  • 9083 — Fast Food: This code is self-explanatory. It applies to a fast food restaurant that doesn’t have wait staff.
  • 9084 — Bars, Discos, Lounges: This code would apply to those locations that make the majority (50% or greater) of their money through the sale of alcohol. Again, if less than 50% is made from alcohol sales, then the code would be 9082.

Although these are relatively easy to distinguish between the proper codes, many companies have misclassifications for their employees on their workers’ compensation.

This is a big mistake, as misclassifications can end up costing a company hundreds of dollars or more each year.

Something else to keep in mind is that the codes above are used in a lot of states, but some locations, such as Pennsylvania, have their own codes. This can lead to a lot of confusion among restaurant owners, particularly if they have restaurants in more than one state.

It’s important to know and understand the codes in your area, so you can make sure everything is properly classified.

For more details and other state exceptions, check out our guide on restaurant workers’ comp class codes.

Classify your Workers Properly

A lot of restaurant employees work only part-time.

However, you need to make sure you are classifying them correctly as W2 employees rather than 1099 employees. This is true even if they are working part-time and even if they are only employed for a short time.

You must also remember that your workers’ comp premium will be based on the payroll for the employees.

Any tips that the employees receive from the customers should not be included in your payroll or wages since they are not usually taxed.

Double-check to make sure you are recording your employees and the payroll properly.

For more details on workers' comp rates and how to calculate your premium, check our blog on workers’ comp rates for restaurant workers.

Keep an Eye on Costs

It's important to know what affects the cost of workers' compensation insurance for your restaurant. 

Here are a few key factors:

  • Class Codes: As mentioned earlier, different types of restaurants have different rates based on their class codes (9082 for full-service, 9083 for fast food, and 9084 for bars). Each code has its own rate depending on the risk involved.
  • Payroll Size: Workers’ compensation costs are calculated based on your total payroll. The more employees you have, the higher your premiums will be.
  • Claims History: A history of frequent or severe claims can increase your premiums. Fewer claims generally mean lower costs..
  • State Rules: Workers’ comp rates vary by state, so it’s important to understand the specific rules and rates in your area.

For more details on what effects your costs , check our blog on 6 Tips to Reduce your Restaurant Workers' Comp Costs.

Risk Management is Essential

Having workers’ compensation doesn’t mean you don’t have to think about risk in the restaurant.

Just because your business is covered, and your employees will receive workers’ comp if they are injured, is no reason not to mitigate as much risk as possible.

Consider some of the different things you can and should do at the restaurant to make it a safer place.

Fire Suppression Systems

Fire Suppression Systems

First, you will want to make sure that you have good, working fire suppression systems in the restaurant. This is especially important in the kitchen, where fires are more likely to break out. 

It’s also important to have the fire suppression systems checked regularly to ensure they are still in working order.

Any fire extinguishers you have in the kitchen should be replaced as needed.

Be sure you have a good ventilation system, as well.

Non-slip Mats

Non-slip Mats

Having mats in the kitchen can help to prevent slip and fall injuries, as the floor can end up slippery at the end of a long day.

Additionally, the floors should be cleaned periodically each day to ensure they are safe.

You should also use “wet floor” signs to help remind your employees that the floors are slippery. They can be more cautious, and it can help reduce falls.

First Aid Kit

First Aid Kit

It is also a good idea to have a first aid kit located in the restaurant in an area that is easy and quick to access.

All of your employees should know where to find the first aid supplies, and ideally, they will know how to use them.

Emergency Plan

Emergency Plan

You might also want to go over scenarios with your employees, letting them know what they should do in the event of different types of emergencies or injuries that occur.

Taking these simple preventative measures can be quite effective when it comes to reducing the number of injuries that occur in your establishment.

This will help to keep your workers’ comp policy cost down.

Don’t forget about Audits

Every workers’ comp policy is audited. If you don’t have one during the policy, it will be audited when the policy is over. It isn’t something to be afraid of. 

The policy is based on projected annual payroll and the audit is the time to get the actual payroll records and see if they match. Since restaurants juggle so many employees across different holidays and busier season, it’s hard to get the payroll numbers exactly right. 

If you overestimated your payroll, you will get a credit for the extra premium you already paid. If you underestimated the payroll, you will get a bill for the difference.

For some tips on how to prepare for the audit, check out our Workers’ Compensation Audit Checklist.

Ask Questions!

Your workers’ compensation policy is vital to the operation of your restaurant, so you need to be sure you are getting what you need.

Take the time to know more about the various classification codes you should be using for each of your employees.

In cases where an employee doesn’t work in the restaurant, but only works in a back office or an offsite office, you might be able to classify them as clerical, for example.

There is a lot to consider and learn, and you should always feel free to ask your insurance company any questions that you might have. They will have the information required and can guide you in making the right decisions for your business.

More questions about what Workers’ Compensation covers?

Do you need a workers’ compensation policy for your restaurant? 

Wondering if workers’ comp covers all medical bills? 

Are you still unsure about all of the general rules about what workers’ comp insurance covers? We can assist with all of your questions. Get started right now by filling out this form for an instant premium quote.

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Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.

Mordechai Kamenetsky

Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.

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