Denver Staffing Agency - Workers' Comp - Small Business Assumes Same Risk as Fortune 500

  • Posted by: J. Kent Gervasini |
  • 7/6/14 |
  • 4:00 PM
Denver Staffing Agency - Workers' Comp - Small Business Assumes Same Risk as Fortune 500

Why do Denver employers use staffing or temporary help agencies? One of the reasons is the ability to shift risk to the Employer of Record (EOR), the staffing agency, who shoulder many common employer risks.

Employee Workers' Comp Code Misclassification Under Insures Your Employees
Working with many small to medium sized Denver businesses, we recognize that small business did not count on having to become an HR professional. Nevertheless, even if you have just a few employees and do not have a Human Resources Manager on your staff, you still assume the same risks and responsibilities as does a Fortune 500 organization. Wow! Yes, that is correct, and one of those risks is employee workers' compensation (WC) misclassification.

Workers’ Comp Classification Code 8810 Most Misunderstood
In our recent March 26, 2014 blog, Workers’ Comp 101: How is My Premium Determined?, we reviewed how premiums are based on your experience modifier (e-mod) rates. The e-mod rates are determined by the National Council on Compensation Insurance (NCCI) and so are the classification codes. Professional employees, for example, accountants, administrative assistant, human resource managers, financial analysts, contract managers, etc., generally work in office environments. However, because employees may work in an office environment, should the worker’s compensation code 8810 (Administrative/Clerical), automatically be applied? NO!

Class Code 8810 is a “standard exception code” in most states. These employees are considered to be in the safest work environment in most organizations. The risk is very low for injury and the cost to the employer maintaining WC insurance coverage is the least expensive. But look further, is your corporate, branch, site, virtual or sales office professional employee really an 8810? 

NCCI Business and Industry Classification Codes Describe the Business and Associated Risks
WC codes are determined for all business and industries and assigned to all employers whose organizations are arranged into groups or categories with similar workplace exposures or hazards. A resource used for a description of business and industry is The North American Industry Classification System (NAICS) (oil & gas, legal, transportation, construction, information technology, etc). To help us understand classification and misclassification, here is a good example:

Example - Small Residential Construction Contractor
The owner, (who has elected to reject workers’ comp coverage, as allowed), and one employee, Office Manager. The owner wants the Office Manager covered but want a policy only using classification code 8810, “clerical office employees.”

How Will the Policy be Classified by the Underwriter?
The policy is classified according to the business type and all risks associated with that business type, as we just discussed. In this case, the correct classification for this residential builder is 5645, “carpentry- detached one or two family dwellings.”  That’s because the primary hazards of the business are not in the office but on the job site;
the nature of the business is not clerical but building homes.

NCCI Business Classification Codes Describe the Business & Associated Risks
Therefore, in order to write a policy and determine a premium that reflects those risks, the proper workers’ compensation business code must be used to protect both the policyholder and the WC insurance provider. 

In 2013, J. Kent Staffing Issued 500+ W-2s
Assigned 27 Different WC Classification Codes to Temporary Staff

Although J. Kent Staffing in Denver, Colorado is a provider of turn-key Temporary Administrative and Professional Staffing Services (TAPS), nonetheless, we assign many WC classification codes outside of the 8810 classification in order to protect our company and keep our employees safe. During the 2013 calendar year, J. Kent’s Human Resources Department assigned 27 different classification codes to our temporary staff even though most of our employees  work in a professional office environment.

J. Kent Staffing's #1 Priority
Keeping our temporary workforce safe.

This can only be accomplished by investing in workers’ compensation insurance coverage which provides the correct WC classification.


The information above does not constitute legal advice. Employers and staffing agencies should consult a Colorado labor or employment attorney with additional questions, or for guidance and more information.


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