A Mudshow Season

Thinking about worker’s compensation costs and the adverse impact comp insurance has on circus. In several states, New York among them, all workers on a circus must be covered by compensation insurance…and if the show remains in NY for more than thirty days, disability insurance as well. While most of us don’t disagree entirely with the notion of workers comp, high costs and widely differing rules and rates from state to state serve to complicate the process and drive up rates. And workers comp[ classifications are both fickle and onerous. The basic rule of thumb works like this. Industries and occupations are assigned a classification number. At last count there were nearly 700 such classifications. Circus and Carnival employees and drivers are assigned the number 9186, as I recall. Most, but not all states use the same NCCI Class codes. Each classification is in turn assigned a Loss Cost based on potential risks associated with the occupation. In California roofers had the highest loss cost, around 17.75, while the loss cost for florist was 1.80. Rates vary from state to state, but theoretically loss cost times one percent of each one hundred dollars in an employee’s wages equals weekly compensation premium. So for a guy on a show earning $300 a week, workers compensation costs each weeks represent a loss cost around 16.10 per one hundred dollars in wages, or $48.30 a week. It doesn’t take a rocket scientist to understand how quickly compensation numbers add up and increase the nut. There are work arounds – some better than others. Low wages coupled with additional commission based compensation can cut costs. And “contracting” employees is a favored method in some states where workers compensation isn’t audited with a fine tooth comb. In New York however, most work arounds don’t survive an audit. For a small show it might be practical to insist that each laborer, performer etc. actually purchased a business license in their state of residence. A single employee/owner in a sole proprietorship is exempt from workers comp. Said “business could then be signed as subcontractors, satisfying the letter of the law. But on any show with more than a couple dozen people on the payroll, creating subcontractors would likely prove nightmarish. So the next time you wonder why some shows either don’t visit places like New York at all, or don’t stay long, think about that loss cost number. It’s one thing to buy a short term pay-as-you-go compensation policy for a few weeks, and quite another to carry a policy for several months.