Classification Codes – Employee Misclassification Different

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Employee Misclassification Different

North Carolina Will Likely Soon Enact Employee Misclassification Bill

Classification codes are not the same as what North Carolina is looking to reign in concerning unscrupulous employers. We begin to receive questions when the subject of employee misclassification hits the Workers Comp newswires.

Hand holding Magnifying Glass Search Employee classification codes Graphic
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North Carolina will very likely enact a law on employee misclassification. However, this does not mean that a company cannot question or dispute the classification codes on their policy, premium audit, or bill.

There are over 100 articles on this blog that reference how to question or dispute your Workers Comp premium audit and subsequent billings.

The misclassification referred to in this case is classifying employees as subcontractors or employees. North Carolina has had a recent history of allowing 30,000+ companies to not have WC insurance or classifying all employees as subcontractors.

Employee Holding Classification Codes Magnifying Glass
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This caused quite a stink when an employee had a claim but was then denied benefits as they were non-insured subcontractors.   One has to wonder how many North Carolina companies still have no WC coverage.

We would have never found out about the 30,000+ uninsured companies if a dutiful newspaper reporter simply compared a few databases that were publicly available.

Even classifying contractors properly is now and will still be permitted even after the upcoming law likely comes into effect this summer. The IRS guidelines provide an overall rule of thumb, but are not state-specific.

Workers compensation classification codes are usually settled at premium audit time. However, adding new classification codes at audit is one of the Ten Red Flags of Workers Comp Policies and Audits.

There is a caveat here. One has to be careful when preparing for a premium audit.  This South Carolina company was prosecuted along with an audit preparation consultant for misrepresenting employee classifications to their WC carrier before the premium audit.

If this seems confusing drop me an email or call me.  The bottom line is whatever law North Carolina or any other state enacts does not preclude your company from questioning or disputing your Workers Comp policies, audits, or billings. That is just good business sense as you should pay every penny you owe in Workers Comp, but not one cent extra.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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
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  • Various trade publications

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