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Ieuter Insurance Group Blog

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Misclassification of Employees with Regard to Workers' Compensation

We recently had to navigate the state’s workers’ compensation placement facility.  While this is not a normal avenue to pursue workers compensation coverage, sometimes it is necessary for risks that do not have an option.  That was the case with this example.


We were placing coverage for a new trucking/long haul business.  While placing coverage using what we thought was the proper code per our manual, it was reclassified by the placement facility when we went to bind coverage


While looking at the reclassification, I can understand why and also appreciate making this change prior to binding/putting the policy in place.  This will definitely save time and resources at the audit by having it placed in the state’s desired code.


On the flip side of this is a work comp policy with one of our standard carriers.  Typically policies are placed as submitted.  At audit time, each code can come under increased scrutiny based on each employee’s duties.  These duties can change on a month to month or even week to week time frame.


These code changes can impact premium.  Misclassification can also create “concerns” at claim time.  These “concerns” will cause increased scrutiny.  We want to make sure each employee is in their appropriate code.


This is why it is good to be insured with your friends in the insurance business.  Annual review of these items, along with significant increases or decreases, should be one of the many items that need to be reviewed regularly.