Workers’ Compensation Insurance and Worker Classification
Written by Marlo .
Two types of business insurance constitute a significant percentage of most companies’ insurance costs: health insurance and workers’ compensation. While health insurance may be mandatory for certain businesses under recent reforms and depending on the state, workers’ compensation is mandatory (with limited exceptions and depending on the state) and a necessary expense of doing business.
One significant way to reduce business insurance costs is to classify workers correctly. Paying “roofer” rates for an office clerk, can cost your business significant premium dollars. Monitor your workforce and classify each employee to their specific classification.
This is such a significant way to save premium dollars that some business owners abuse the classification system. For example the Massachusetts Attorney General just reported on the arrest and arraignment of a roofing company owner who had allegedly classified the roofer employees as carpenters. The alleged scam resulted in defrauding his workers’ compensation insurer of $107,000 in premiums over four years.
I point to this story to show the potential savings of a legitimate review of worker classification. Done in a legitimate fashion, savings can often be found.