If you run a bakery, you already know the daily risks your team faces. Hot ovens, sharp slicers, heavy bags of flour, wet floors—these aren't hypothetical dangers. They're part of the job. And when someone gets hurt, workers' compensation insurance is what protects both your employee and your business. Here's what you need to know about getting the right coverage at the right price.
Is Workers' Comp Required for Bakeries?
In almost every state, yes. If you have employees—even just one—you're legally required to carry workers' compensation insurance. Texas and South Dakota are the only exceptions where it's optional, but even in those states, most business owners still get coverage because it protects them from lawsuits if an employee is injured on the job.
The requirements kick in as soon as you hire your first employee. Whether you're running a small retail bakery with a couple of counter staff or a wholesale operation with a full production crew, the law treats you the same way. No workers' comp means risking serious fines, legal trouble, and personal liability if someone gets hurt.
Understanding Class Code 2003
When you apply for workers' comp, your insurance company will assign your business a classification code based on what you do. For bakeries, that's almost always NCCI class code 2003. This code covers both retail bakeries (think your neighborhood cupcake shop) and wholesale or commercial operations (larger production facilities that supply grocery stores or restaurants). It also includes your delivery drivers.
Why does this matter? Because your class code determines your base rate. Insurance companies look at historical data for bakeries nationwide to figure out how risky your industry is. Bakeries have moderate risk—not as dangerous as roofing or construction, but definitely higher than office work. Hot ovens, industrial mixers, slicers, and the physical demands of the job all factor in.
One thing to watch out for: make sure your employees are classified correctly. If you have someone who's primarily doing office work or bookkeeping, they might qualify for a different, lower-risk class code. Paying the bakery rate for desk workers means you're overpaying. A good insurance agent will help you get this right.
What Does Workers' Comp Actually Cost?
For bakeries, the average cost runs around $128 per month, or about $1,541 per year. Smaller operations might pay closer to $54 per month ($643 annually), while larger bakeries with more employees or higher payrolls will pay more. But these are just averages—your actual cost depends on several specific factors.
First, your state matters. A lot. In New York, for example, the 2025 loss cost for bakeries is $4.42 per $100 of payroll, with actual rates ranging from $7.96 to $9.63 depending on your carrier. Other states have completely different rate structures. California, Florida, and Illinois all have their own workers' comp systems with unique pricing.
Second, your payroll drives the premium calculation. Workers' comp is priced per $100 of payroll. So if you have $200,000 in annual payroll and your rate is $5 per $100, you're paying $10,000 per year. More employees or higher wages means higher premiums—that's just math.
Third—and this is the big one—your experience modification factor, or e-mod, can dramatically change what you pay. Start with a clean record and you'll have an e-mod of 1.0. Have a bunch of claims, and your e-mod goes up, which increases your premium. Keep your workplace safe and avoid claims, and your e-mod can drop below 1.0, saving you money. A single serious injury can increase your premiums for years.
Common Bakery Injuries and Why They Matter
There are about 1,700 nonfatal injuries and illnesses among U.S. retail bakery workers every year. The most common ones are exactly what you'd expect: burns from ovens or hot ingredients like caramel and fruit fillings, cuts from slicers and mixers, slips and falls on wet or flour-dusted floors, and musculoskeletal injuries from lifting heavy bags of flour or moving racks of bread.
Less obvious but still important: respiratory issues from flour dust, skin conditions like dermatitis from handling dough, and equipment-related injuries from industrial mixers, conveyor belts, or ovens. Any of these can lead to a workers' comp claim, which affects your future premiums.
What does workers' comp cover when someone gets hurt? Medical bills, rehabilitation costs, and lost wages while they're recovering. If an employee can't return to work, it also covers disability benefits. For you as the employer, it includes liability protection—so if an injured employee tries to sue you, your policy handles the legal defense.
How to Keep Your Costs Down
The single most effective way to reduce your workers' comp costs is to prevent injuries in the first place. Build a strong safety program. Train your staff on proper lifting techniques, make sure equipment is well-maintained, keep floors clean and dry, require cut-resistant gloves when using slicers, and enforce safety protocols even when you're busy.
Beyond safety, verify that your employees are classified correctly. If someone spends most of their time at a desk doing administrative work, they shouldn't be coded as a bakery worker. That misclassification costs you money. Work with your insurance agent to audit your classifications annually.
Finally, shop around. Workers' comp rates can vary significantly between carriers, even for the same class code in the same state. Get quotes from multiple insurers and compare not just price but also service quality and claims handling reputation.
Getting Started with Coverage
If you're opening a new bakery or hiring your first employee, don't wait. Get workers' comp coverage in place before anyone starts work. Most states impose penalties or fines if they catch you operating without required coverage, and if someone gets injured before you have insurance, you're personally liable for all their medical bills and lost wages.
Start by contacting an insurance agent who specializes in commercial coverage or food service businesses. They'll ask about your payroll, number of employees, what type of bakery you run (retail or wholesale), and your claims history if you've had coverage before. They'll also help you understand your state's specific requirements and get quotes from multiple carriers.
Workers' comp isn't optional, and it's not something to cut corners on. But with the right approach—proper classification, strong safety practices, and smart shopping—you can get the protection you need without overpaying. Your employees depend on you to keep them safe, and your business depends on having the right coverage when accidents happen.
