Tuesday, January 2, 2018

Roofing Salespeople--the Disputes Continue

One of my first emails of the New Year involves proper classification of salespeople/estimators for a roofing company. In the past, it was common for such workers to be assigned to the outside sales class, Code 8742, at a relatively inexpensive rate. But in recent years, insurance companies have increasingly insisted that, because such workers must, at least occasionally, go up on a roof to inspect it, their payroll belongs in the roofing code (at a vastly higher rate.)

It's a tricky issue, complicated by some unique rules that apply. One might think that, as long as the roofing company kept track of specific time such workers spent up on the roofs, then only a small percentage of the payroll would go into the more expensive class. But Code 8742 is non-premium divisible--that means it's an all or nothing classification, and the moment a workers spends any time whatsoever doing something that doesn't qualify for 8742, all of the payroll must be placed into the more expensive class.

This is different than the rules that usually apply to construction type classifications, which usually allow for such premium division (as long as the specific hours spent in each are recorded properly.)

Insurers often don't explain these find points very well when the coverage begins, so this can become a sore point after an audit is done and the insurer moves payroll out of the outside sales class and into the roofing class (at a substantial increase in premium.)

Rules on this can vary. California rules developed by WCIRB specifically say outside sales people for roofing companies belong in Code 8742, but the NCCI rules don't have such specific language.

Certainly, workers who are routinely going up on roofs represent a work exposure that would appear to be greater than the typical outside salesperson. But with advances in technology, not all salespeople/estimators have to physically go up on a roof.

With satellite photos, drones, and sophisticated estimating software, it is possible for roofing salespeople/estimators to do their work without going up on a roof. In such cases, the application of the roofing classification would not be warranted--but resolving that point may take some time and effort with a stubborn insurer.

In cases where estimators must still occasionally physically go up on a roof, perhaps a more reasonable accommodation would be to change the rules so that premium would be divisible between occasional roofing exposure and outside sales. But in our current age of Workers Comp deregulation, I don't get the impression that the insurance industry is in a hurry to address this problem.