Simply Explaining Insurance #112- Workers Compensation Class codes

Not the sexiest topic but an important one. This podcast is for businesses that have employees doing more than one type of job and how to properly set up your workers compensation policy as well as do the payroll audit properly.

The most important thing the business owner has to do in cases where there are multiple jobs being done is to be able to prove how much work is done in each class. And by how much work, I mean how much payroll.

For example, I insure a company and they are a residential window cleaning company. There are two class codes for this risk. One for ground floor and one for above ground floor. As you would imagine, the above-ground floor code is significantly more expensive (3x as much) as the ground floor code.

When the payroll audit comes around, the business owner needs to prove how much payroll is done per class code. The best way to do this is via your bookkeeper or accountant and it should show on their paystubs. It should segment out how much payroll is done per job.

If the business owner is unable to prove this, ALL of the payroll will go to the highest class code. This can result in a serious charge on your workers compensation policy.

The other topic this podcast covers how clerical work is defined. There are some very strict rules when it comes to this classification. It is important to know these rules and regulations to manage your policy properly. As always consult with your agent in regards to questions with setting up your policies properly.