Industry Decisions
Construction PEOs and the Workers Comp Mod Factor Reality
TL;DR
- •Construction PEO economics are dominated by workers comp.
- •In a master policy, your individual experience mod is absorbed into the PEO's rating — for better or worse.
- •Companies with mods below 1.0 may pay more inside a master. Companies above 1.0 may pay less.
Construction is the workers-comp-heavy industry where PEO economics swing most dramatically. The math comes down to one thing: how your individual experience modifier compares to the PEO's blended rate.
The mod factor math
If your standalone mod is below 1.0 (better than industry average), a master policy may cost more — you are subsidizing higher-mod members of the pool. If your mod is above 1.0, a master policy may cost less. Run the comparison explicitly before signing.
What disappears in a master
- Direct relationship with the carrier underwriter
- Granular loss-control feedback at your level
- Some control over claims management
What you gain
- Multi-state payroll handling for prevailing wage projects
- Compliance bandwidth for OSHA recordkeeping
- Benefits scale you would not get standalone
See PEO for construction for the operational specifics.
Frequently asked questions
Will a PEO accept us if our mod is high?
Some will, some won't. Mod-tolerant PEOs exist; the trade is usually higher admin pricing.
What happens to our mod when we leave a PEO?
Treatment varies by state and PEO. Confirm in writing before signing.
Related reading
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