Types of Misclassification = Employee Status – Not Same As Wrong Class Codes
Two types of misclassification of employee status- and they are not the same whatsoever.
We have received emails over the last few weeks concerning various Departments of Insurance pursuing employers for misclassifying employees in their Workers Comp policies. This is not to be confused with the misclassifying of employees as subcontractors.
The recent press releases about employers being fined large amounts of money for misclassifying employees are not the same as an employer questioning how their employees are classified. The states are pursuing employers that classify an employee as a subcontractor.
The IRS has a list of rules that differentiate an employee from a subcontractor on their website. You may also use the search box in this blog and search for IRS. The link to the IRS article is in one of my prior blogs.
Your company always retains the right to dispute (Within 3 years of policy expiration except CA) how your employees are classified in your Workers Comp policy. This means your company can dispute the premium audit that the premium auditor has prepared. Once again, disputing the premium audit or questioning the premium auditor’s work will never result in the Department of Insurance investigating your business practices.
In fact, your Workers Comp policies have included in them the right to dispute anything in the policy or audit. If you read the final pages of your policy it is in there. In fact, all states require the insurance carrier to include in the policy the dispute procedure in detail.
State Departments of Insurance are beginning to heavily pursue the misclassification of employees as subcontractors. Why? The employees are being removed from the Workers Compensation Insurance system and the tax system.
A company needs to make sure they avoid the two types of misclassification.
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