In June of 2025, Nevada Senate Bill 317 was passed unanimously by both chambers of the Nevada Legislature and signed into law by Governor Joe Lombardo. The Bill introduces a significant update to the state’s workers’ compensation system by eliminating the $36,000 payroll cap previously used in premium calculations.
What is the Payroll Cap?
Previously, when calculating workers’ compensation insurance premiums, only the first $36,000 of an employee’s annual wages were included. Any earnings above this threshold were not considered, which reduced premium costs for businesses with higher-paid employees.
What Has Changed?
With the passage of SB 317, the payroll cap has been removed. Now, the full amount of an employee’s annual wages is used to determine workers’ compensation premiums. This adjustment aligns Nevada’s approach with that of most other states.
For example, before SB 317, if an employee earned $60,000 annually, only $36,000 was counted toward the employer’s premium calculation. Now, the entire $60,000 salary is included in the calculation.
Additional Changes Implemented by SB 317
Although the removal of the payroll cap is the most significant change SB 317 imposes on Nevada’s workers’ compensation system, it does include other changes intended to reduce or offset the impact of the cap removal. These changes include cost-saving measures such as a limited prescription drug formulary, regulatory requirements for insurers to regularly update provider lists and confirm providers are accepting new patients, and streamlined requirements for out-of-state insurers to enter Nevada’s workers’ compensation market, which should lead to increased competition among insurers.
What This Means for Your Business
Businesses with employees earning more than $36,000 may see an initial increase in workers’ compensation premiums since a greater portion of payroll is now subject to premium assessment. However, premium increases are expected to be moderate. Nevada already maintains a highly competitive workers’ compensation insurance market, with many insurers offering coverage. To attract and retain customers, insurers will need to keep premium increases moderate. If premiums increase too sharply with a given insurer, businesses can turn to other more competitive insurers. The already competitive market combined with the additional offsetting features of the bill should help keep the market stable.
What Action Should I Take to Protect my Business?
Now, more than ever, it is critical that businesses work with an insurance broker with access to multiple insurance carriers to ensure your business is getting the best possible workers’ compensation insurance package at the best possible premium. Particularly with the anticipated influx of out-of-state insurance carriers due to the reduced barriers to entry, your broker should be shopping your workers’ compensation coverage aggressively at each renewal.
Swarts Manning is one of Nevada’s premier locally owned and operated independent insurance agencies. Its owners are born-and-raised Nevadans with well over 100 years of combined insurance experience. If you have additional questions related to SB 317 or its impact on your business, please fill out this form and one of our expert risk managers will reach out shortly.
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