When a business owner thinks about purchasing another business, he or she probably considers workforce changes, tax implications and other common areas of concern. A lesser-known
or often overlooked consideration is the impact the purchase could have on workers' compensation costs.
When these transactions occur, the purchaser (or successor) inherits the rate and liability of the business it has acquired. That's because BWC combines the workers' compensation
history (also known as the experience) of the acquired business with the purchaser's experience to determine the premium rate it charges to the purchaser.
Potential for workers' compensation impacts
This transfer of experience can have a major, sometimes negative, impact on the purchaser's current and future premium rates. It can also jeopardize a purchaser's ability to
participate in certain BWC employer programs and group-rating plans offered by group sponsors.
The successor also acquires any outstanding liability associated with the business it has purchased. This includes:
- Any unpaid premiums, fees or assessments owed to BWC;
- The dollar-for-dollar costs of any claims that occurred during any uncovered periods the purchased business had.
Effective Jan. 1, 2016, BWC implemented a new method to determine successorship. The link below provides a detailed description of the new decision-making process and the factors
BWC uses to determine if the purchase, acquisition or merger will result in a successorship.
Fact sheet: BWC's New Method for Determining Successorship
How to request information from BWC
At BWC, we want to help business successors avoid unpleasant surprises when it comes to the workers' compensation history of a business it may acquire. At the request of the
acquiring business, we will provide a limited release of information about the business that may be transferred.
To help facilitate these requests, we created the Request for Business Transfer Information (AC-4) form. This form, which both parties must sign, allows us to release
information about the entity that may be purchased, including:
Download and print the AC-4
- Demographic information;
- Accounts receivable balance;
- Payroll and experience modification history;
- Most-recent quarterly claims costs;
- Pending audits.
Please send questions via email to BWC policy processing, or
contact your local customer service office.