SMP Consulting Group - The Worker Compensation Audit consultants

Incorrect Workers Compensation Employee Classification Codes in the Chemical Industry can be costly.

Workers Compensation insurance premium rates are highly dependent on Employee Classification Codes.  What are Employee Classification Codes?  These are the four digit codes insurance companies use to set premiums for workers according to their job and the risks associated with their activity.

Two codes that impact premiums in the Chemical Industry are 4828 and 4829.  At first glance the definitions look similar so you may be indifferent as to the code you place your employee under.  That indifference could be an expensive mistake.

The National Council on Compensation Insurance ("NCCI") (www.ncci.com) defines 4828 and 4829 as the following:

4828 is applied to employees engaged in compounding, blending, mixing, bottling, and packaging chemicals.

4829 is applied to employees engaged in the manufacturer of products requiring a chemical conversion. A "chemical conversion" is the process whereby a substance undergoes a molecular change in composition.

Why the fuss?

The rates for 4828 and 4829 vary.

                                  4828                            4829
Iowa                          $2.36                           $1.69
Mississippi                $2.92                           $1.10
Florida                       $6.32                           $3.98

Rates are per $100.

If you have employees listed as 4828 when they should be 4829 you are overpaying your workers compensation insurance premiums.

Other common mistakes are with Employee Classification Codes are found in the following:

4511 - Analytical laboratories
4741 - Asphalt or Tar Distilling or Refining
1472 - Distillation - Wood
2132 - Distillery - Spiritous Liquor

Every code is priced differently.

What should you do?  First, you should take a look at your payroll runs to see how employees are classified.  Use the definitional codes provided by your State's Worker Compensation Bureau.  The NCCI coordinates it for twenty-three states so you may start there.

Alternatively, you can hire a professional that specializes in Workers Compensation Audits.  The most reputable firms do not charge an upfront fee.  Typically they will go back three years and do it for fifty-percent of the savings.  Your portion of the savings are furnished to you directly and you enjoy the benefit of lower costs for the next several years.

This article was written by Greg Walker at SMP Consulting Group.  SMP's specializes in workers comp audits (www.smpconsultinggroup.com).  Gwalker@smpconsultinggroup.com