Workers' Comp Code 8742: Best Practices and Common Errors

What is a workers’ comp class code?

The National Council on Compensation Insurance (NCCI) maintains a public list of class codes, which assigns a specific number to each job role, industry, and business type. This number is called the class code.

Class codes are four digits long and may differ by state. Think of them like barcodes that easily reference the information and risk associated with each job role. Everyone in the same job role within a state will share the same class code.

Typically, each workers’ comp insurance policy has one primary class code, determined by the business’s main operation. This is known as the "governing class code."

Even if a business has multiple activities, it generally has a single governing class code to ensure the policy covers the appropriate level of risk for injury.

Kickstand Note:

Construction businesses are an exception; they can divide their payroll across multiple codes if they keep accurate records.

8742 Workers’ Comp Code Description

According to the NCCI, Code 8742 is designated for "Salespersons or Collectors—Outside." This code typically applies to roles that involve clerical-type work performed out in the field, where employees travel from place to place to do their work, such as outside sales.

Note: Almost all states use Class Code 8742 for these roles. However, Delaware and Pennsylvania use Class Code 0951 instead.

Although businesses are usually allowed only one main class code, outside salespersons can be classified separately under Code 8742. 

Code 8742 is one of the few "standard exception codes," which lets businesses classify certain roles differently from their primary operations. These codes are common roles found across various industries and usually represent lower-risk  roles, leading to cheaper rates. 

Other Standard Exception Codes

Other standard exception codes include:

• Class Code 8810: For people working in clerical roles
• Class Code 8871: For employees who perform clerical duties from home or another remote location
• Class Code 7380: For drivers, chauffeurs, and their helpers

Kickstand Tip: 

Considering Class Code 8742? It's a smart move to cut costs, but be careful. According to the NCCI, in 2022, 60% of policies using Code 8810 or Code 8742 as the main classification faced a reclassification—and potential fines—during audits.

So, while you should definitely check if this code fits any roles in your business, avoid using it indiscriminately.

Class Code 8742 Examples 

To qualify for this code, employees cannot be involved in operations. 

Here are some examples of roles that fit under Class Code 8742:

• Salespeople
• Claims adjusters
• Real estate agents
• Tax appraisers
• Reporters
• Interior designers
• Recruiters

Class code allocations may not always seem intuitive. Still, it is important to follow the guidelines to avoid “reclassifications” at audit - which usually come along with big bills, and possibly fines. 

8742 Workers’ comp code rates per $100 of Payroll - 2024 

The national median rate for Code 8742 is $0.24 per $100 of payroll, according to a leading partner carrier. To help you understand the cost differences across states, here are the rates for Class Code 8742 in selected states. 

• Alabama: $0.28
• Arkansas: $0.12
• Connecticut: $0.26
• Florida: $0.25
• Georgia: $0.17
• Louisiana: $0.36
• Maine: $0.23
• Maryland: $0.22
• Mississippi: $0.32
• Missouri: $0.29
• North Carolina: $0.20
• Rhode Island: $0.34
• Tennessee: $0.23
• Texas: $0.09
• Virginia: $0.12

Workers comp code 8742 vs 8810

Class Code 8742: Salespersons, Collectors or Messengers, Outside: Used for salesmen or messengers.  

Class Code 8810: Clerical Office Employee NOC (Not Otherwise Classified).

These two codes—8810 and 8742—are common exceptions that can be used in addition to the governing class code. This often leads to confusion since both are exceptions, but they serve different roles. The key difference lies in the employee's responsibilities.

If the employee is often on the road for client meetings, they would fall under Code 8742. On the other hand, if an individual primarily performs clerical or administrative tasks in an office setting, they would be categorized under Code 8810. 

Risk of Misusing Workers' Comp Code 8742

Misusing workers' comp Code 8742 can lead to serious repercussions. Businesses that improperly classify their employees under this code may face fines, back pay, and a hefty bill when the misclassification is discovered during an audit.

Also, misusing Code 8742 can have a negative impact on your Experience Modification Factor, commonly known as ExMod.  

The ExMod compares your claims history to others in the same industry, so a significant injury under Code 8742 can distort your ExMod.

For example, imagine you operate a construction company and an employee classified under "8742" suffers a serious injury, such as a severe cut. This type of injury is far more severe than what is typically associated with salespeople. 

The result? Your ExMod is likely to increase significantly, leading to higher premiums.

Note: The ExMod is a complex formula that insurance companies use to determine your workers' comp rate, considering your industry and state. For more details, refer to our ExMod explanation page.

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Potential issues with businesses using governing code 8742

Many businesses prefer to classify their entire operation under Code 8742 due to the lower premiums it often provides. 

However, insurance carriers may be reluctant to offer policies under this code alone because the low premiums might not adequately cover the associated risks. To make the policy viable, carriers often apply a “minimum premium”. 

Still have workers’ comp Code 8742 questions?

Understanding workers' comp codes can be tricky. At Kickstand, our knowledgeable agents are here to guide you through the process, helping you secure the best rates and most comprehensive coverage for your business. 

Reach out to us at 866-338-6388 or get an instant quote today.