Why You Need to Classify Employees Properly

You Need to Classify Employees Properly

Let’s look at why you need to classify employees properly for proper coverage. Your business’s workers compensation policy often will have several class codes listed for different types of employees. Standard codes are available for clerical duties and salespeople. The rest are dependent upon your specific industry.

It takes an expert insurance agent or broker who is familiar with both the state laws and classification systems, as well as your specific industry, to verify these codes for you.

There are also important implications if an employee does work in two different areas that blend across codes. Often, that employee must be placed into the higher-rated/more hazardous code, and payroll for the employee cannot be broken out into two separate classifications. There may be exceptions depending on the industry and your state’s workers compensation laws.

Rules on how you classify employees have recently changed at the federal level, and states often tweak their workers comp laws. Moreover, changes in employee duties or your payroll merit a talk with your agent or broker. Use your annual review to make sure you don’t have any classification errors, and let us know any changes you make to staff, duties, hours, or pay.

Are you curious if you have classified your employees properly? Contact Rettino Insurance for a FREE Evaluation.