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Misclassification Confusion Subcontractors vs. Classification Codes


Misclassification Confusion Of Employees and Subcontractors

The misclassification confusion applies to subcontractors, not employees. We received a few emails today concerning yesterday’s post.   There are two different types of misclassification of employees.  One is a much more serious situation than the other.

Vector Graphic of Man Misclassification Confusion Using Magnifying Glass

The first involves misclassifying an employee as a subcontractor. If it can be proven the employer purposely misclassified an employee as a subcontractor to avoid paying Worker Comp premiums and taxes, this is a very serious violation of the Workers Comp insurance and tax laws.  Operating a business under these circumstances can result in very serious consequences and should be avoided at all costs.

The second situation involves an employer disputing or attempting to correct their employees’ job classification codes.

Please do not let all of the press coverage over misclassifying employees as subcontractors vs. employees discourage you from making sure the employees are properly classified under the Workers Compensation policy.  We have never seen an instance where an insurance carrier implied or accused an employer of doing something illegal by questioning how their Workers Comp policy is constructed.

However, we do discourage any employer from disputing an insurance policy or premium audit without some basis other than “we paid too much in premiums.”  This may ruin a great working relationship with the respective insurance company.

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Employee Misclassification – Back In News

Employee Misclassification Means Contractor or Sub The employee misclassification news was back in. Classification Codes such as 8810 (Clerical/Administrative) are the number one question we

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


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