Why is Assigning Contractor Workers’ Comp Codes So Hard?

Like so many back-office tasks associated with employing workers on a contract basis, assigning workers’ compensation classification codes to contractors is a task mired in complicated rules and exceptions. Common sense may tell you that all you need to know to assign a workers’ comp code is the contractor’s duties. While an accurate job description is essential to correct workers’ comp coding, the environment where the work is being performed also plays a large role in how a contractor should be classified. Each company has a “Governing Code” determined by the type of end product they produce, the materials they use to create that product, and the process they use to make it. Most of the workers within a company will fall under this Governing Code.So then all you need to correctly classify a worker is the company’s Governing Code, right? Wrong. If they are a driver, salesperson, or clerical person (someone works in the office of the company), they may fall under a “Standard Exeption” code that would be used in place of the Governing Code. But that only applies if their specific assignment is not mentioned in the description of the Governing Code. For instance, if the Governing Code for the company mentions drivers, contractors that drive would be classified under the Governing Code rather than the Standard Exception for drivers.Confused yet? If not, try to classify an engineer. There is actually a Governing Code for engineers – 8601. But you can only use that if they work for an engineering business, such as an engineering consulting firm. Many employers make the mistake of automatically classifying engineers under the clerical code of 8810, but you can only use that code if they are not out on the shop floor for any significant amount of time, and what constitutes a “significant amount of time” can be different depending on who you ask. You also must consider if they have direct contact with the product or have supervisory responsibilities.The bottom line: don’t take anything at face value when assigning workers’ compensation codes. Chances are your first instinct may be wrong, so read all code descriptions carefully and consider all options before deciding.