The Impact of Workers' Compensation Experience Rating on Employer Appeals Activity

Workers' compensation experience rating is presumed to create a financial incentive for employers to make investments that are expected to reduce the incidence and severity of work place injuries. However, the impact of experience rating may be more comprehensive, encouraging firms to take otehr actions that can reduce their workers' compensation costs. One of these actions that has raised concern is employer appeals of worker's compensation board decisions. Based on data from Ontario, we find strong evidence that, although the total volume of employer appeals is not large, experience‐rated employers are more likely to appeal than are non‐experience‐rated employers. To our knowledge, this is the first empirical study to examine the relationship between experience rating and employer appeals; a gap in the literature is noted by Ehrenberg (1988).