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Are Lower Cost Standard Exceptions Disappearing For Insureds?

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Lower Cost Standard Exceptions – Are These Class Codes Disappearing?

One of the most common questions I receive now from Risk Managers concerns the lower cost Standard Exceptions disappearing now.  Let us first cover the definition of a Standard Exception Class Code:

In addition to employees who perform basic business operations, nearly all businesses have clerical office workers, and many have outside salespersons. These activities, referred to as “Standard Exceptions,” are a deviation from the one-business, one-classification rule. Since clerical office work and outside sales activities are commonly performed and carry a relatively low risk of injury, most businesses are permitted to use these “Standard Exception” classifications for the workers who conduct exclusively clerical or outside sales work – (from WCIRB). 

pic of lower cost standard excption codes cash
Wikimedia Commons License – Tracy O

Common Standard Exception Class Codes

Three  of the most popular lower cost standard exceptions are:

Links are provided above for each standard exception.  Some of our most popular articles cover the lower cost standard exceptions.

Shift Away From Lower Cost Standard Exceptions examples

Why I decided to write this article on subjects I have covered so many times is the increasing concern from employers when the classification codes are changed to encompass all employees – for example

  • 8874 Electronic Instruments Manufacturing – Data transferred from 8810, 8742, and 8859……
  • 4512 Biomedical Research Labs – Data transferred from 8810….

Check out the article from yesterday on the three reasons why class code changes are necessary.  One of the reasons is the dynamics of how companies have quickly evolved over the last few years. That makes sense for the most part.

Pandemic Had Great Influence

Many employers switched employees from inside the office to working from home. The lower cost standard exception code 8871 had been put in place for many years at NCCI and recently by the WCIRB.   The telecommuter class code payroll grew very quickly.   Two articles that cover 8871 written in the last two years are:

California Adds 8871 Class Code

8871 Class Code Now Popular 

My Answer to the question posed?  Yes, much payroll had been moved to or combined with other more expensive class codes.  However, so much payroll – due to the pandemic – had been moved away from the main business class codes to the lower cost standard exception codes.

Bottom Line – with the changing of the definition of class codes, make sure that your agent or someone at the carrier explains any changes including:

  • The large movement of payroll inside of the class codes on your policy or premium audit
  • Elimination/addition of Class Codes – especially the lower cost standard exception codes
  • Anything that gives you a bad “gut reaction” to your policy or premium audit
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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management 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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