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Civil Engineer Asks Great Worker Compensation Class Code Question

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Civil Engineer Was On The Right Track With Workers Compensation Codes

A civil engineer was looking over the house that I am presently selling.   He had asked me what I do for a living.  I had told him that I am a worker’s compensation consultant.

picture of civil engineer centrifuge
Public Wikimedia License – Blkutter

He posed this question –

I work as a civil engineer.  My company is moving all the civil engineers from a remote location into the main plant.   Today we were told that they are setting up an offsite trailer for us with a barrier fence between the plant and us.

Why would they put us so far away from the plant and build a fence between the trailer and the plant?  Is it some risk factor?

I said – “Well your plant manager did not do that because he does not like the civil engineers.   It could be due to the Workers Compensation rating system. ”

working civil engineer squad
Wikimedia Commons – Master Sgt. Roger Parsons

I went on to explain that the civil engineers working inside the actual plant would likely cost the company a large amount of workers compensation premiums as the civil engineers could be grouped into a plant worker’s classification code.

The plant manufacturers large metal pipes so the difference would be huge in the Workers Compensation rate.   I pulled out my trusty smartphone and pulled up the North Carolina Rate Bureau advisory lost costs.

  • Class Code – 8742  (Civil Engineer that does not handle material manufactured)  – .26 per $100 – very low rate
  • Class Code- 3022 – (Pipe Mfg)  –  4.81 per $100  – much higher rate

Comparing those two classification codes  = 4.81 / .26 = 18.5 or 1850% more expensive if the group was included in the pipe manufacturing Class Code.   Ouch!

He said so you are telling me that there is an 1850% difference if we work directly inside the manufacturing plant even though we are not involved in the manufacturing process?   I said yes.

One has to remember that these are advisory rates and not the insurance carriers rates due to the Loss Cost Multipliers filed by all workers compensation insurance carriers.

The average civil engineer salary is $83,750.    Let us take that a step further.

83, 750 *  (.26/100)  =  $217.75 in yearly premiums  for Civil Engineer

83,750 * (4.81/100)  =  $4,028.38 in yearly premiums  working in the plant

And yes, I have made a ton of assumptions, but the idea is the same.   The plant manager and likely the CFO were smart not to bring the civil engineers into the plant.  I am sure there were many other considerations.  Workers Comp rates would have likely been one of the considerations.

 

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4 Responses

  1. I’m not sure I understand your analysis. Class 8601 is for an insured engaged in engineering as a distinct business, not for engineers on the staff of a manufacturer. Engineers on the staff of a manufacturer are assigned to the basic classification of the business. Physical separation does not allow a separate class code for an engineer, unless they have no exposure to the operative hazards of the business, in which case they may qualify for 8810, but not 8601.

    Where am I going wrong in my thought process?

  2. You are correct. Thanks for pointing that out. I had re-written a part of the article to match what you are saying after I received a phone call similar to your comment. The post did not update in the system.

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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
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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