Term Of The Day – Misclassification
An error by the rating bureau or insurer that places an employer is the wrong class code, causing an incorrect premium to be charged. Misclassifications can also occur when an employer misrepresents the scope of business in order to be classified in a class code that has a lower manual rate. Misclassification also occurs with an employer classifies an employee as an independent contractor in order to lower the premium by lowering the reported payroll.
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