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Premium Audits – Paying Manufacturing Rates For Office Employee


Can Premium Audits  = Manufacturing Rate For An Office Employee?

When can premium audits generate manufacturing rates?   Two weeks ago, I posted on how two computer programmers could be rated as manufacturing employees at the year-end premium audit. Unfortunately, I did not complete the next posting on the subject. I will go ahead and do that now.

Clipart of man programmer premium audits Manufacturing Rates
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Quite often, companies will make the honest mistake of having clerical employees end up in their highest rated classification. My prior example was of two computer programmers that had to cross through the manufacturing area in a plant to go on break. An insurance carrier in California during one of their premium audits charged the company the full rate for the manufacturing classification code and not the computer programmer code.

Was this proper?  If the employees were on break and not performing their job duties, can the break time actually be counted as work time for the premium audit?

Man Looking at Warehouse Premium Audits Blurry Background

No, it was not as the employees only went through the manufacturing area while on break. In CA, as other states, this would not cause the employees to be rated as manufacturing. The key here is they were on break at the time. If the employees had to cross through the manufacturing area for a job duty, then the premium auditor would have been correct to assign the manufacturing class code.

We see this situation occur on premium audits due to miscommunication between the auditor and the employer contact during the time of audit. How can this situation be avoided? I will post on that next time.

The California employer decided to dispute two of their premium audits due to the employee’s work centered being a programmer approximately 99.9% of the time.  The results of that dispute are still pending.   The word “break” makes the audit dispute valid to a point.

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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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