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?
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.
- Every minute the employee worked under a certain classification code would have to be tracked. An estimate or % is not acceptable.
- You cannot mix the payroll among the Standard Exception codes and another class code. The main Standard Exception is code 8810 – Clerical.
- The employee cannot be considered a miscellaneous employee. The term miscellaneous is not a true miscellaneous employee.
- The payroll for holiday, sick, vacation, and overtime will usually be assigned to the higher class code.
- The records for this must be very accurate and well-documented.
- Certain states may not allow the split of payroll.
- Certain classification codes may not allow the payroll to be split.
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 actually reduce the Workers Comp premium before policy renewal or the payroll audit.
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