Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Interchange Of Labor Rule – Employee’s Payroll Divided


Interchange Of Labor Rule For Workers Comp Payroll

With the Interchange of Labor Rule – Can Employee’s Job Duties Be Divided on Workers Comp Payroll Reports?

A Question From One Of Our Readers On The Last Post –

Are we able to split a job into different duties and keep track of each job duty on the payroll?  Would that save us Workers Comp premiums? 

Vector Icons Interchange of labor rule Employee's Payroll job Duties Classification

Yes, you may split up an employee’s job duties among different classification codes under the Interchange of Labor Rule.  This may save your company $ in Workers Comp premiums.  However, the rules are very specific and somewhat complicated.  There are a few caveats that come with splitting up an employee’s payroll into different workers comp classification codes.

They are:

  1. Every minute the employee worked under a certain classification code would have to be tracked.  An estimate or % is not acceptable.
  2. You cannot mix the payroll among the Standard Exception codes and another class code.  The main Standard Exception is code 8810 – Clerical.
  3. The employee cannot be considered a miscellaneous employee.  The term miscellaneous is not a true miscellaneous employee.
  4. The payroll for holidays, sick, vacation, and overtime will usually be assigned to the higher class code.
  5. The records for this must be very accurate and well-documented.
  6. Certain states may not allow the split of payroll.
  7. Certain classification codes may not allow the payroll to be split.


Hand Presenting Interchange Of Labor Rule Coins Percentage Calendar And Clock

Unfortunately, we have not seen the division of payroll as an advantage to an employer.  The main reason is that the employee has part of their job duties as a Standard Exception, which results in the employee being rated in a higher classification code.  This applies even if the employee only works a few minutes in a different job.


It is advisable to make sure that the division of an employee’s payroll will reduce the Workers Comp premium before policy renewal or the payroll audit.

©J&L Risk Management Inc Copyright Notice

James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


Get the latest workers' comp news FREE!

This field is for validation purposes and should be left unchanged.