Impact of Classification Code Changes on Architecture and Engineering Firms
Effective October 1, 2024, a key change to New York’s workers’ compensation classification system will impact architecture and engineering firms that currently have employees classified under 8810 (Clerical Office Employees – Not Otherwise Classified). The New York Compensation Insurance Rating Board (NYCIRB) has determined that all employees in engineering and architectural consulting firms will now be classified under 8601 (Engineer or Architect Consulting & Clerical), eliminating the previous clerical exception for non-traveling employees.
Click here to read the posting by NYCIRB
Key Implications:
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Increased Workers’ Compensation Costs:
- Employees previously classified under the lower-cost 8810 category will now fall under 8601, which carries higher workers’ compensation insurance rates.
- Firms may see a notable increase in insurance premiums as a result of this reclassification.
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Loss of Clerical Cost Savings:
- Previously, firms could classify non-traveling administrative employees (such as office managers, payroll clerks, and administrative assistants) under 8810 to take advantage of lower rates.
- With all employees now included in 8601, firms will lose this cost-saving measure, even for workers who never visit job sites.
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Operational & Compliance Considerations:
- Firms must review and adjust payroll records to ensure compliance with the new classification.
- The risk of misclassification penalties increases if firms attempt to maintain clerical staff under 8810 despite the rule change.
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Financial Planning & Budget Adjustments:
- Organizations will need to forecast increased labor costs associated with higher insurance rates under 8601.
- Companies may need to adjust contract pricing and client billing to account for these added expenses.
Conclusion:
This classification update represents a significant cost shift for architecture and engineering firms that previously relied on the lower 8810 classification for clerical employees. With all staff now included in 8601, firms should proactively evaluate their workers’ compensation strategy, update payroll classifications, and plan for increased insurance expenses to remain compliant and financially prepared.