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Work Comp Class Code 8871 Clerical Telecommuter Very Popular Now

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Work Comp Class Code 8871 Popular During the Coronavirus Pandemic

The Workers Comp Class Code 8871 represents telecommuters.  Exactly who are telecommuters?  Let us first cover the general non-workers’ comp generic definition.

Picture Coronavirus class code 8871
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Definitions of Class Code 8871

General 

Telecommuters are defined as:

  1. Someone who works at home and communicates with his or her office by phone, email, or internet.
  2. On another level, the teleworker or telecommuter is someone with computer knowledge who can utilize and work on data transmitted down a telephone line or bounced off a satellite

The first definition covers many people who are working out of their homes now for their employers.   The second definition seems a little archaic.

Workers’ Compensation Rating Bureau (NCCI) definition(paraphrased): 

For purposes of  Class Code 8871:

  • A residence office is a clerical work area located within the home of the clerical employee.
  • The residence office must be separate and distinct from the location of the employer. In the event
  • If an employer operates a business from a residence and the employer has clerical staff at the employer’s business location residence, these clerical employees are classified to Code 8810.

Clerical duties of an employee classified to Class Code 8871 include but are not limited to

  • The creation or maintenance of financial or other employer records, handling correspondence, computer composition, technical drafting, and telephone duties, including sales by phone.
  • Depositing funds at banks*
  • Purchase of office supplies*
  • Pickup or delivery of mail*

*Outside the office duties are incidental and directly related to that employee’s duties in the residential office.

State Exceptions To Class Code 8871

The following states do not allow this class code:

  • California
  • Massachusetts
  • Montana
  • New Jersey
  • Oregon
  • Texas

I will not research each of the states besides California

Calfornia has its own rating bureau – the WCIRB.  Many of our article and blog readers are from the Golden State.    California may introduce Class Code 8871 after their June 2, 2020 meeting.  The WCIRB lists the topic for discussion at this meeting.

Will the WCIRB use the same code?  We will find out sometime in June.

Two Very Similar Caveats

  1. Some Classification Codes include telecommuting clerical employees as part of the basic code.  Do not assume that all telecommuters are listed under 8871.   An example is Doctor’s offices.
  2. Do not assume everyone working from home goes under Class Code 8871 – such as delivery drivers.

Coronavirus Pandemic And Wage-Splitting (Very Important)

Close-up of female surgeon Class Code 8871 wearing face mask
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One of the questions that we have received often since the pandemic shutdowns started-  If an employer is mid-policy and requires employees to work from home, how do they handle their wage reporting when the job changes to a telecommuter.

From this NCCI webpage:

In accordance with Basic Manual Rules 1-D-3 and 2-G, the employer would be responsible for maintaining separate payroll records for the change in operations or the wages earned for an employee whose occupation has changed. If these records are not maintained, then all payroll would be assigned to the highest-rated applicable class code. See footnote. 1

1An example could be a retail store that remains open for delivery of goods but closes the showroom to consumers. Several of the retail showroom employees will work from home to assist with phone orders, customer service calls, and related clerical paperwork. These employees may be reassigned to Code 8871—Clerical Telecommuter Employees.

_____________

You must split the payroll between when the employees were working in an office and then when they had to work out of their home due to the coronavirus lockdowns.

Bottom Line –

Hand pointing Class Code 8871 at a financial concept
StockUnlimited

Sloppy or ignoring your wage and time recordkeeping is going to cost you dearly with your worker’s comp audit and will likely affect your company greatly during tax reporting time.   

Organize your records now.  If you have them organized – a good job.  Switching to the proper Class Code be it 8871 or another code may save your company a large amount of premiums.

 

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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:

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  • Entrepreneur Magazine
  • Bloomberg Business News
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  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
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