In the construction industry, payrolls between union and non union contractors can be vastly different. Since Workers’ Compensation premium rates are based on payrolls, the premium that is paid by a non union contractor can be substantially cheaper than that paid by a union contractor, when both are engaging in the same kind of work. The amount of time that a worker spends on the job site is a much stronger indicator of the likelihood of injury than is the payroll that it generates. Therefore, in order to level the playing field between union and non union contractors, premiums should be based on hours worked, not payroll
Utilization of the salaries of employees serves as a competitive disadvantage to those employers who choose to compensate their workers at a higher wage level. In a “low bid” environment, this formula unfairly acts against union contractors who have negotiated terms and conditions favorable to the bargaining unit employees. Calculation of rates based on hours worked whould be a more accurate measure of actual risk on the job while eliminating the competitive disadvantage the present arrangment engenders.