Your Guide to Use Workers’ Comp Code 8742 Correctly

Are you confident your outside sales team is classified correctly for workers’ compensation? For many businesses, a simple misstep in applying Workers Comp Code 8742 can lead to thousands of dollars in unnecessary premiums. Even worse, a nasty surprise audit! Hang on! We will break down exactly who qualifies for this high-value classification and how to use it to your advantage.

Workers’ compensation isn’t as simple as companies think! One wrong code and your premium swells up. In this guide, we have explained WC code 8742 in detail.

What is Workers Compensation Class Code 8742?

Class code 8742 is specifically designed for employees who perform their duties off premises. It is one of the most crucial “Standard Exception Codes” that distinguishes clerical staff from travel staff. For instance:

Salespersons
Collectors
Messengers
Consultants

This classification is crucial to lowering the premium. It separates low-risk off-site jobs from the main high-risk employee classification.

Who Should Be Classified Under Work Comp Class Code 8742?

The simple answer is that employees who perform non-manual tasks are usually away from the employer’s premises. Due to the low premium rates of WC code 8742, it is essential to classify employees correctly.

Direct Roles:

These employees fall directly under the 8742 workers’ comp code definition:

Outside Salespeople and Collectors: Individuals whose main duty is to solicit business. Such as securing orders or collecting payments from customers while traveling. They must sell from samples, catalogs, or sales materials only and not deliver merchandise.
Traveling Messengers: Employees who deliver envelopes, messages, or documents on foot or using public transportation. Although messengers who use vehicles for delivery are typically classified as Drivers (Code 7380).

Roles Classified by Analogy:

The NCCI and state rating bureaus classify many professional roles under Code 8742 by “analogy”. As their work is essentially low-risk, it has an off-site, non-manual nature in outside sales. This is often the appropriate work comp class code for consultants and other field-based professionals.

Account Executives: Their work is clerical but performed away from the office.
Real Estate Agents: Spend the majority of their time traveling to show properties and meet clients
Claims Adjuster: Travel to inspect damages, properties, or accident scenes to assess a loss. However, adjusters working for Insurance Companies are generally included in the governing code 8723.
Tax Appraisers: Travel to visit and inspect properties for valuation purposes.
Reporters: Travel to gather information or conduct interviews.
Field Representatives: Travel to meet candidates, attend job fairs, or visit client locations for professional, non-manual tasks.
Interior Designers: Travel to client homes or businesses to consult on designs, provided they are not performing installation, construction, or physical labor.

Differentiating Code 8742 from Other Standard Class Codes

The WC code 8742 is an exception among all other standard codes. The core difference is exposure to risk as compared to other office workers.

8742 vs. 8810: Outside vs. Inside Employees

Worker compensation code 8810 applies to employees who perform administrative, clerical, and accounting work. Their exposure to risk is generally low. It’s limited mostly to typical office hazards like slips and trips.

As compared to workers, those in code 8742 are more at risk due to travel. For instance, road accidents occurred as they worked in uncontrolled environments.

8742 vs. Higher-Risk Codes (Manual Labor)

Employees performing auto or construction work cannot use the 8742 code. They have a different work comp class code for auto body employees and other manual work. Typically, the 5403 worker compensation code is used for manual labor. Here is a quick list of workers with their WC codes.

Employees performing auto or construction work cannot use the 8742 code. They have a different work comp class code for auto body employees and other manual work. Typically, the worker compensation

WC Code	Description
3303	Spring manufacturing or bumper repair shops.
3372	Electroplating metal for protective coating.
3602	State labor code for remedies. (California example)
3724	Heavy machinery erection and repair.
3821	Dismantling wrecked cars for parts.
5403	General carpentry, major structural work.
5606	Construction executive management, supervisors.
5645	Carpentry, single or two-family home.
8380	Mechanic, general auto repair shop.
8391	Auto service, sales, and car wash.
8392	Parking garages, lots, valet service.
8397	Auto transmission repair, rebuilding only.
8742	Salespersons, collectors working outside the office.
8810	Clerical office employees, on-site only.
8871	Clerical employees working from home.
9015	Property management, general building staff.
9102	Commercial or domestic lawn maintenance.
9505	Painting car, auto body finishing.

The Cost and Consequences of WC Class Code Misclassification

Misclassification means the employees are wrongly categorized. There is no single way to count it positively on a company’s profile. Here are a few ways it impacts your company:

Financial Impact:

If you are classifying your employees who fall in 8742 into any other standard category, you will have a high premium. Most of the other codes are higher risk than this exception. Leading to more financial impact on your company. The result?

Higher inaccurate premiums
Experience modifier rating increases the cost
Lost savings from overpaying the premium

Penalties:

Using the wrong WC code can lead to potential penalties and legal liabilities. The federal government strictly states that following the correct codes is necessary to avoid fines and stay compliant. Otherwise, you can end up with:

Criminal charges for wilful fraud
Class-action lawsuits
Major Settlements
Unpaid payroll taxes
Back wages owed

Coverage Risk:

If year-end worker compensation finds errors in the class code, you risk coverage. Resulting in:

Policy cancellation by the carrier
Disputed or denied injured worker claims
Misclassified workers may lack coverage

Business Impact:

Misclassification can result in the denial of workers’ legal rights and benefits. Consequencing in:

Damaged the company’s reputation and trust
Misreporting risk harms all policyholders

Conclusion: Ensuring Compliance with Workers’ Compensation Code 8742

Understanding which employees fall under code 8742 is essential to staying compliant. It helps avoid complexities and keeps the premium right. If you are still confused about the classification of your employees or are having trouble getting WC insurance. Smart Apple Insurance Agency can help you get the right policy. We guide you through the policy coverage, premium requirements, compensation codes, and more.