Classification codes cause problems. It’s not their fault. They’re just numbers. But the kind of numbers that cause a lot of folks a lot of trouble! And one of those problems is when a garage business classifies counter help in the clerical classification. Let’s talk a bit about this.
First off there’s really nothing new about this common classification code problem. It’s been causing problems for a long time. But it’s something where we want shine a little light. It’s not uncommon for 0ur office to receive calls from garage business owners who are experiencing an insurance company class code payroll reassignment of clerical employees, code 8810, into the business governing code of 8380 or 8391 or one of the other auto repair codes. This often happens after a physical audit has been conducted. That’s where the auditor actually has a chance to look around the business and observe how normal business operations are conducted.
Here’s what commonly happens. When looking at a garage type risk you will typically find a pretty good example of separation of work space. Most auto repair operations will have a physical separation of space between the garage repair area or shop and the office or counter area where the customer comes in and discusses the problem with their vehicle and turns over their keys to the service writer. Mechanics are normally exposed to hazards found within the shop. Lifting, removing and installing vehicle parts, the use of tools, grinding, cutting, lifts and jacks used on vehicles can all be found within the typical auto service repair garage.
Counter help will typically handle checking in and checking out customers when they drop off or pick up their vehicles before or after repair. Most often, in smaller garage operations, counter help will be a combination of the garage owner and bookkeeper. This is the point where things will go wrong.
Common sense would indicate that a bookkeeper or office helper who stands behind the counter, welcomes the customer, shakes their hand, takes their keys and completes the sales transaction by taking cash from the customer would fall into the clerical or 8810 classification. Wrong! It continues to be a common practice that those employees who handle cash transactions with a customer in a garage risk operation will be classified into the governing class, 8380 or 8391. If on the original workers compensation policy their payroll or remuneration was included under 8810, they will most likely be moved into 8380 or 8391. This action will increase an employers premium because the 8810 class would carry a very low rate per 100 of somewhere around .30 while the garage repair class code would carry a much higher rate, perhaps somewhere around $5 per 100 or payroll.
The premium impact? The premium for an employee making $30,000 in the clerical code may be somewhere around $90. While the premium for the same employee in the garage code could be somewhere around $1,500. That’s a significant difference in what the employer may have to pay. Just for having a clerical employee complete a money transaction with a customer.
There’s another issue with these codes. If you read the scopes description of 8380 or 8391 you’ll see that they include counter help. Specifically, if a repair shop has a parts department that retails or wholesales parts to customers, you’ll see that those parts department employees will fall under 8380 or 8391. This situation has in the past caused agents and employers a bit of trouble. You see, most parts departments are segregated from the repair operations. As a matter of fact, if you’ve ever visited the repair department of a typical car dealership you’ll find that when the mechanics working in the shop and need a part they will go to the parts department’s counter to order and collect the parts they may need. And the temptation when assigning employees to classification codes would be to put the parts department employees under some type of retail store code. Parts departments are often found sequestered in a locked room with limited access. So in this situation we may have a clear separation of work spaces yet the basic manual and scopes indicates those parts department and counter help are to be classified in 8380 or 8391 with few exceptions. Those exceptions will be state specific directives along with the concept that the entire operation of the employer be classified into the predominant operation. No real change there. Think about it. If the predominant business operation is repair with some parts sales then repair is the classification used. Of course other state rules and normal classification procedures are to be followed.
The take away for this post is to be cautious when classifying workers of auto repair business operations. You should follow the code descriptions carefully. And if you find yourself facing a 8380, 8391 and 8810 class code problem, reach out to a workers compensation consultant for assistance!
Thanks for reading!