Sad but true, many California Contractors get a ‘Surprise Bill’ at their end-of-year audits and find out they have misclassified their employees and they end up owing money to the Workers Compensation Insurance Carrier for not correctly classifying their employees.
As an employer, it’s important to understand dual wage classifications. But what, exactly, is the dual wage classification system? What do you, as an employer, need to understand about it? And what are the separate classifications for different types of construction workers with different compensation rates?
What Are Dual Wage Classifications?
For Workers Compensation Class Codes, there are different types of jobs that have different classifications for workers’ compensation purposes; the classifications help insurers determine how much an employer should pay in workers’ compensation premiums for their employees. But in construction, many of those classifications are broken down into two wage classes based on the employee’s wage rates. low wage and high wage. These separate classifications are what’s known as dual wage classifications.
How Are Wage Classes Determined?
Each construction class has a certain wage threshold, set by the California Workers’ Compensation Insurance Rating Bureau (WCIRB), for determining whether an employee should be categorized as low wage or high wage; if the employee’s regular hourly rate falls above that threshold, they’re considered high wage. If it falls below the threshold? They’re categorized as low-wage.
Generally, higher wage employees have lower workers’ comp premiums, even when they’re doing the same kind of work; this is because workers that demand a higher wage generally have more experience than their lower wage counterparts—and, as such, are less likely to get injured or have to file a workers’ comp claim.
But in the case of a workers’ compensation audit, in order to classify a worker under the high wage classification (and qualify for lower premiums), you need to be able to verify their total number of hours worked through payroll records and time cards. (that not only shows the total hours worked, but also start times, end times, and any meal times or breaks). If you don’t have the documentation to back up your employee’s total number of hours worked (and can prove that their hourly wage falls above the threshold), they’ll automatically be classified as low wage—and you may find yourself facing a hefty bill from your workers’ comp insurance services provider.
Bottom line? If you want to secure the best workers’ compensation premiums, make sure to classify your employees correctly—and keep impeccable records that back up your classifications.
What Are the Construction Classifications With Dual Wage Thresholds For 2021?
Now that you know what dual wage classification is, let’s cover the current construction classifications, class codes, and hourly wage thresholds for the construction industry in California.
Below are the Dual Wage Classifications and Example Rates as of Sept. 1, 2021.
|CONSTRUCTION CLASSIFICATIONS||CLASS CODES||HOURLY WAGE THRESHOLDS||EXAMPLE FILED RATES|
|Automatic Sprinkler Installation||5185||Less than $29||$11.67|
|5186||More than $29||$3.72|
|Carpentry||5403||Less than $35||$24.52|
|5432||More than $35||$9.24|
|Concrete or Cement Work||5201||Less than $28||$16.34|
|5205||More than $28||$8.90|
|Electrical Wiring||5190||Less than $32||$8.69|
|5140||More than $32||$4.11|
|Excavation NOC||6218(1)||Less than $34||$11.24|
|6220(1)||More than $34||$7.57|
|Gas Mains or Connections Construction||6315(2)||Less than $34||$11.72|
|6316(2)||More than $34||$8.24|
|Glaziers||5467||Less than $33||$16.10|
|5470||More than $33||$6.86|
|Grading Land NOC||6218(2)||Less than $34||$11.24|
|6220(2)||More than $34||$7.57|
|Heating and/or Air Conditioning Ductwork||5538(2)||Less than $27||$11.48|
|5542(2)||More than $27||$6.75|
|Heating and/or Air Conditioning Equipment||5183(3)||Less than $28||$10.61|
|5187(3)||More than $28||$6.92|
|Land Leveling||6218(3)||Less than $34||$11.24|
|6220(3)||More than $34||$7.57|
|Masonry||5027||Less than $28||$23.84|
|5028||More than $28||$10.80|
|Painting||5474||Less than $28||$16.81|
|5482||More than $28||$8.71|
|Plastering and/or Stucco Work||5484||Less than $32||$23.86|
|5485||More than $32||$12.83|
|Plumbing||5183(1)||Less than $28||$10.61|
|5187(1)||More than $28||$6.92|
|Refrigeration Equipment||5183(2)||Less than $28||$10.61|
|5187(2)||More than $28||$6.92|
|Roofing||5552||Less than $27||$43.53|
|5553||More than $27||$23.26|
|Sewer Construction||6307||Less than $34||$16.97|
|6308||More than $34||$10.47|
|Sheet Metal Work||5538(1)||Less than $27||$11.48|
|5542(1)||More than $27||$6.75|
|Steel Framing||5632||Less than $35||$24.52|
|5633||More than $35||$9.24|
|Wallboard Application/Installation||5446||Less than $36||$12.96|
|5447||More than $36||$6.73|
|Water Mains or Connections Construction||6315(1)||Less than $34||$11.72|
|6316(1)||More than $34||$8.24|
|Waterproofing||5474(2)||Less than $28||$16.81|
|5482(2)||More than $28||$8.71|
If you have any questions about Worker’s Compensation Class Codes and or would like a Free Quote & Consultation on how to ensure you do not overpay, contact: Kevin at: 530.320.3617 or [email protected] Or, simply CLICK HERE