Now, we’ll delve deeper into additional critical factors that auditors evaluate, including general inclusions, general exclusions, and multiple classifications. Understanding these areas will further empower you to identify premium savings opportunities and maintain precise control over your workers’ compensation costs.
4. General Inclusions
“General inclusions” refer to employees whose payroll must be included within the employer’s primary classification code even though their jobs may differ from the main operations. These employees provide support but are not central to the employer’s primary business activities. Common examples include:
- Janitorial staff
- Cafeteria employees
- Company nurses
- Internal IT departments
These roles do not receive separate classification codes, and their payroll must be factored into the employer’s overall exposure. Accurate inclusion prevents potential underreporting or misclassification that could lead to unexpected adjustments during audits.
This post is one in a 3-part series:
5. General Exclusions
Some roles carry such distinct risks or differ significantly from an employer’s core operations that they’re classified separately. These employees, known as “general exclusions,” require their payroll to be reported and calculated separately, directly influencing workers’ compensation premiums. Common examples of general exclusions are:
- Sawmill operations
- Stevedoring (loading/unloading ships)
- Employer-operated daycare services
- New construction activities conducted by the employer’s own workforce
- Aircraft operations
Separate reporting ensures these uniquely hazardous or specialized roles don’t inflate the premium for the employer’s primary business operations.
6. Multiple Classifications
Certain businesses, especially those with diverse operations or multiple locations, may require more than one classification code. This concept is known as “multiple classifications,” and it ensures each distinct part of a business accurately reflects its own risk profile. Businesses commonly needing multiple classifications include:
- Construction companies
- Temporary labor services
- Employee leasing firms
- Farming operations
- Retail (mercantile) establishments
Each operational segment or location receives its own classification, and payroll is divided accordingly. This detailed division helps ensure the premium calculations reflect the true risk exposure and cost accurately.
To effectively manage this process, detailed record-keeping is essential. Employers must clearly document work hours, job duties, and locations to properly allocate payroll across the correct classifications.
Next Steps:
In the final article of this series, we’ll cover specialized situations including “One More Exception,” the assignment of classification codes, and additional policy adjustments known as “schedule rating.” Stay tuned to complete your understanding and gain further control over your workers’ compensation premiums.
Contact: mstack@reduceyourworkerscomp.com.
Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/
Injury Management Results (IMR) Software: https://imrsoftware.com/
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