If you’ve spend any time at all on our website or perhaps looking over our blog you are bound to have picked up on the fact that workers compensation codes are a driving force in development of an employers premium. I’d venture to say that all employers know that!
Let’s just get this out of the way before we go on….there is nothing to be found in workers compensation manuals about “fair,” “being fair” or the phrase, “that’s not fair.” You just won’t find these words anywhere! Unfortunately many employers still have a misguided idea of “fair” and “being fair” when it comes to workers compensation classifications.
One of the hardest situations we face, on an almost daily occurrence, is explaining to an employer how workers compensation classifications are not about “being fair.” But rather how they are about being right. Their resistance comes from a general misunderstanding of how workers compensation premium generation works and what it’s all about. To many employers, the classification system seems broke and that’s understandable especially when a correct classification may lead to a higher cost.
It often starts when an employer is faced with an adverse audit. Perhaps their class codes have been modified or payroll that was previously allowed into one code had been moved into another higher rated code. Seems like the first thing they do is start looking over their policy. It’s then that they become fixated on the class codes on their policy. “But that code doesn’t describe what my employees really do!” Heard that! Been there! What they don’t understand is that the classification system is extremely complicated. Maybe not so much for a simple, single code, accurately described operation. But when there are multiple codes that may apply or when the code description is very broad and inclusive of many different work processes it becomes more difficult.
If you’ve ever looked at the truncated code description as provided on a workers compensation policy information page you will probably scratch your head and utter to yourself…”huh?” And you will probably think to yourself…”That doesn’t describe what my employees really do!” Sound familiar? Classification code descriptions are much more than the three to six word description you find on the policy. As a matter of fact some descriptions are several pages long. You won’t find that on your policy either!
So how does an employer know that the description on their policy is accurate for the work they perform? Start with your agent. Most agents can get their hands on the detailed descriptions mentioned above and can walk you through how the code was determined. If there’s still questions, contact a workers compensation consultant. Most of us work in the world of classification codes and can lend a hand!
Opinions? You bet! The world is full of them. Opinions about classification codes are not much different!
Hope this somehow helps you out and thanks for reading!