The Importance of Employee Classification for Workers’ Compensation
Are your clients correctly classifying their employees? Your clients must classify their employees in one of two ways:
- As exempt or non-exempt, which keeps them in compliance with federal laws like the Fair Labor Standards Act, which regulates the minimum wage, child labor laws, and more
- As employees or independent contractors
Employees may also be classified by their role within the company, like if they are full-time, part-time, or temporary.
While employee classification may seem straightforward, it can be difficult for your clients to stay organized when it comes to employee classification—and small mistakes can have big consequences. If an employee is misclassified, it can lead to:
- Wage and tax violations, like not paying an employee the right amount
- Tax and payroll fines
- Required back payments to misclassified employees
If employees are improperly classified, it can also lead to Workers’ Compensation complications. Misclassified employees can lead to higher Workers’ Compensation coverage costs. Misclassified employees can also lead to hefty fines, penalties, and lapsed Workers’ Compensation coverage.
If your clients need help with classifying their employees, show them the benefits of a PEO, or professional employer organization. A PEO can help them with a wide variety of Workers’ Compensation and HR tasks, including employee classification.
At PEO Insurance Brokers Network, we work directly with insurance agents and PEOs, and will put our knowledge to work to find the best fit for your high-risk clients. We provide Workers’ Compensation coverage to businesses in need, no matter the risk, and will help you find the best PEO coverage and savings for your clients in high-risk industries like manufacturing, roofing, transportation, temporary staffing, and more.
To learn how we can help you find coverage for your high-risk industry clients, please reach out to receive a quote.
