Workers compensation for contractors is always a challenge. In this hub we're going to review some of the hot workers comp topics for contractors including the effects of mis-classification and incorrect use of workers compensation codes. So if you're in business as a carpentry contractor, concrete contractor, roofing contractor, excavator, utility contractor, landscape contractor, masonry contractor, electrical contractor, dry wall or finish contractor, painting contractor or one of the many other types of contractors not listed...read on!

Workers comp codes have a direct impact on the premium a contractor will pay for his workers compensation insurance. There is a different rate associated with each code assigned to a contractors business. As an example, the clerical code rate may be $.40 while the carpentry framing code rate may be $15.00, quite a large difference and these rates are per $100 of payroll.

Workers comp codes, in general, are applied to the primary description of the business activities of any operation, that description in which the most payroll of the operation falls. When it comes to contracting operations you may find, unlike in a shoe store where all employees are categorized under the blanket code of "shoe store," multiple workers compensation codes being used for the same business. So it's very important that proper classification and application of the workers compensation codes are applied to any contracting operation.

Mis-classification of workers compensation codes is a common problem among contracting operations. A common problem that costs employers many thousands of dollars a year in overpaid workers compensation premiums.

Due to the very complex nature of workers comp code assignment it is important that employers review their workers compensation insurance policies each and every year. And when it comes to trying to verify accuracy of the application of work comp codes, it's probably a good idea to seek professional help. So search the web for a workers compensation audit consultant, they'll be able to help review your policies and make sure you are paying the right premium for your operation.

So, we've established the importance of having your employees assigned to the proper workers comp codes. Here's a few tips:

• Check with your insurance agent to see if separation of payroll is allowed. If they can't tell you then call a professional workers comp consultant. If so, be sure to get the details and make sure you set this up correctly so you can take advantage of this at audit. (Payroll separation allows you to categorize any individual employee into multiple workers comp codes, depending on the work they are doing, subject to very specific guides and rules.) Basically under payroll separation you could have an employee on one job laying concrete and classed under concrete for that job and that same employee on another job doing carpentry work and being classed into carpentry for that job. But this is tricky and must be done correctly otherwise it will not be allowed at audit time and that employees full payroll will go into the highest rated class. Check with a professional for advice on this.
• Make sure your job supervisors are classed correctly. Take advantage of the supervisory classifications if possible. Again there are specific rules that must be followed. Check with a professional workers comp consultant to make sure you're doing it right.
• Make sure all of the workers comp codes on your policy are representative of the type of work you do. You'd be surprised how many times a contracting business changes or adds a service that is not correctly reflected in their workers comp policy. Keep your insurance company informed about what type of work you are doing. This could keep you out of trouble at audit time.
• Keep on top of the assignment of work comp codes as being used on your policy. Do an annual review. Do not let the workers compensation insurance company dictate to your business through audit, be pro-active and keep on top of the effects these codes have on your business.

When it comes to workers compensation, the details really do make a difference! If you take anything away from this hub it should be pay attention to the details! Workers compensation codes do play a big part in the cost of a contracting operations workers comp insurance. But it is a cost that can be controlled. Controlled by being accurate as to the proper classification of work being performed.

Hope this hub helps you out and thanks for your time!