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.
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.
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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