Under Oregon law, a general contractor hires 3 employees at $25 per hour for a 40-hour work week. What is the approximate weekly workers compensation premium if the rate is $2.15 per $100 of payroll?
Correct Answer
B) $64.50
Total weekly payroll = 3 × $25 × 40 = $3,000. Premium = $3,000 × ($2.15/$100) = $64.50.
Why This Is the Correct Answer
Step 1 — Total weekly payroll: 3 employees × $25/hr × 40 hrs = $3,000. Step 2 — Premium: ($3,000 ÷ $100) × $2.15 = 30 × $2.15 = $64.50. The correct answer is $64.50.
Why the Other Options Are Wrong
Option A: $32.25
Option A ($32.25) results from calculating the premium for only half the payroll (e.g., using 1.5 employees or 20 hours instead of 40). This is a halving error—double-check that all 3 employees work the full 40-hour week.
Option C: $96.75
Option C ($96.75) is the premium for $4,500 in payroll (or equivalently, 4.5 employees). A candidate who accidentally multiplied by 4 employees or 60 hours instead of 3 employees × 40 hours would land here.
Option D: $129.00
Option D ($129.00) corresponds to a payroll of $6,000, which is double the correct payroll. This error occurs when the rate is applied to $6,000 instead of $3,000.
Memory Technique
WC Premium formula: (Total Payroll ÷ 100) × Rate. Remember 'per $100 of payroll' means you divide first, then multiply. Think of it as a percentage expressed in dollar units rather than percent units.
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