One of the important parts of workers comps insurance pricing is placing each of the workplace exposures into codes. Each of these codes has an individual rate that is dependent on the risk of that particular exposure. It is important to accurately classify these codes so as to reduce the chances of having to spend extra money unnecessarily. A wrong code in the employees payroll may make a huge difference in their premiums and rates. It is important therefore as a business owner to be conversant with the classification codes of each employee and include definitions of their jobs in your company.
In some cases, an audit may make a mistake in classifying the workers. Most of these auditors are hired to do the work and due to the fixed time frame to complete the job may make errors. They put most of the blame on the business owners. If an employee is misclassified, this means that that the carrier of the compensation is favored as the default is to the code that is highly rated.
Another mistake that is likely to happen is when a business owner put much payroll into clerical codes. The rule is that any employee that is classified into the clerical code, any interaction they have with customers or if their duties are in line with the governing classification, then they are moved to the governing class audit. This causes the employer to incur extra costs for their employees compensation premium. It is common that businesses forget to split their general and clerical operations hence making more payments than they should.
It is, therefore, important that as a business owner you realize that mistakes do occur while making classifications. To correct this, you need to be proactive and dont accept all classification as being correct and work with experts who are well experienced. This will help you in saving much money.