Imagine this: a business owner opens their workers’ comp audit letter and discovers a surprise five-figure bill. The reason? An employee classified under workers’ compensation class code 8742 was reclassified duringthe audit. Unfortunately, this scenario is far more common than most employers realize.
Class code 8742 is one of the most misunderstood and frequently misclassified workers’ compensation codes in the U.S. Designed for low-risk, field-based clerical sales roles, it carries some of the lowest rates nationwide—but also one of the highest reclassification rates.
Because premiums, audits, and even legal exposure hinge on correct classification, understanding how this code works is critical. In this guide, you’ll learn exactly what class code 8742 covers, who qualifies (and who doesn’t), how rates vary by state, why audits trigger reclassification, and how to protect your business with proper documentation and strategy.
What is Workers Compensation Class Code 8742?
Workers compensation class code 8742 is officially defined by the National Council on Compensation Insurance (NCCI) as:
“Salespersons or Collectors—Outside.”
This classification applies to employees who perform clerical-type sales or collection duties entirely away from the employer’s premises. It was created to separate low-risk, non-manual field roles from higher-exposure sales and delivery jobs.
Core Qualification Requirements
To qualify for class code 8742, every requirement below must be met without exception. If even one condition is violated, auditors will reclassify the employee—often retroactively.
100% Off-Site Work
Employees must perform their job duties entirely away from the employer’s physical locations. This includes offices, warehouses, retail stores, job sites, and distribution centers.
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No desk, workstation, or assigned office space
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No regular attendance at staff meetings held on company premises
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No administrative work performed on-site
Work is expected to occur in the field, such as client locations, properties being evaluated, or assigned territories. Even occasional office work (for example, paperwork drop-offs or weekly check-ins) can disqualify the role during an audit.
Audit risk: Timecards, badge swipes, Wi-Fi logs, and email timestamps are often reviewed to verify work location.
No Delivery of Products or Materials
Employees classified under this code may not deliver, transport, or distribute merchandise, equipment, or materials of any kind.
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Carrying brochures, catalogs, contracts, or digital devices is acceptable
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Demonstration items or product samples are allowed only if they are lightweight and not sold or delivered
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Transporting inventory, replacement parts, tools, or customer orders is strictly prohibited
The moment an employee delivers physical goods, even occasionally, the role moves into a higher-risk sales or route classification.
Audit risk: Mileage logs, vehicle reimbursements, and expense reports are commonly used to identify hidden delivery activity.
No Supervision or Operational Duties
Employees must function strictly as individual contributors. They cannot direct, manage, train, or oversee others in any capacity.
Disqualifying activities include
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Hiring or training new employees
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Approving timecards or schedules
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Managing territories for other salespeople
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Conducting performance reviews
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Acting as a “lead” or interim manager
Even informal supervision, such as mentoring or onboarding,g can trigger reclassification.
Audit risk: Internal emails, CRM permissions, and organizational charts often expose hidden supervisory roles.
Clerical-Type Duties Performed in the Field
The work itself must be clerical or administrative in nature, even though it is performed outside the office.
Acceptable field-based clerical duties include
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Sales calls and client presentations
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Property inspections or evaluations
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Data collection and reporting
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Surveys, interviews, or assessments
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Contract review and documentation
The key distinction is that the employee does not perform manual labor, construction, installation, repairs, or hands-on operational work.
Audit risk: Job descriptions that include words like install, service, repair, deliver, or operate equipment almost always lead to reclassification.
Why All Four Requirements Matter
Class code 8742 is priced as a low-risk classification, and insurers enforce its rules aggressively.
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Retroactive premium increases
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Audit penalties and fees
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Multi-year Experience Modification (ExMod) damage
Expert Tip
The fastest way to lose this classification is job duty creep. Review roles quarterly and update documentation immediately when duties change.
Why This Code Exists
The purpose of class code 8742 is to reflect the very low physical risk associated with these roles. Exposure is typically limited to driving, walking, and client interaction, which results in lower injury frequency and severity.
Standard Exception Code Status
This is considered a Standard Exception Code, meaning it can override an employer’s governing classification—but only when applied correctly.
Expert Tip
Standard exception codes are audit magnets. Auditors scrutinize them more aggressively than most classifications.
State Variations
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Delaware uses 0951 instead of 8742
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Pennsylvania applies unique exceptions and interpretations
Always verify state-specific rules before assigning this code.
Who Qualifies for Class Code 8742?
Eligibility is determined by job duties—not job titles. Many professions qualify by analogy when their exposure closely matches outside clerical sales work.
Commonly Qualifying Professions
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Outside sales representatives
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Real estate agents
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Insurance agents (outside only)
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Claims adjusters
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Tax appraisers
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Field recruiters
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Sports scouts
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Field-based reporters
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Medical equipment sales reps
Classification by Analogy Explained
Class code 8742 is assigned by analogy more than any other workers’ comp code. If a role isn’t explicitly listed by NCCI but shares the same exposure profile—off-site, clerical, non-manual—it may qualify.
Non-Obvious Examples That Often Qualify
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Political canvassers
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Market research interviewers
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Field inspectors (non-construction)
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Brand ambassadors (no product handling)
Expert Tip
If two jobs have the same risk exposure, NCCI allows classification by analogy even if the job title doesn’t appear in manuals.
Who Does NOT Qualify
Misclassification often happens when employers overlook exclusions:
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Route salespeople who deliver products
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Sales managers with supervisory duties
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Hybrid roles (office + field work)
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Anyone handling merchandise delivery
Even occasional warehouse or office duties can disqualify an employee.
Class Code 8742 vs 8810: Understanding the Difference
These two low-cost codes are frequently confused.
| Factor | 8742 | 8810 |
|---|---|---|
| Work location | Field-based | Office-based |
| Physical activity | Driving, walking | Sedentary |
| Public exposure | High | Low |
| Clerical duties | Outside | Inside |
Why Confusion Happens
Both codes are inexpensive and clerical in nature. However, location is the deciding factor. Field work = 8742. Office work = 8810.
Premiums may be similar, but audits will reassign codes if duties don’t match exactly.
Workers’ Comp Rates for Code 8742 by State
The national median rate is approximately $0.24 per $100 of payroll, making it one of the least expensive classifications available.
Sample State Rates (Illustrative)
| State | Avg Rate |
|---|---|
| California | $0.30 |
| Texas | $0.22 |
| Florida | $0.18 |
| New York | $0.34 |
| Illinois | $0.27 |
| Pennsylvania | $0.29 |
| Ohio | $0.21 |
| Georgia | $0.20 |
| North Carolina | $0.19 |
| Arizona | $0.23 |
How Premiums Are Calculated
Formula:
Payroll ÷ 100 × State Rate
Example:
$200,000 payroll × $0.24 = $480 annual premium
Compare that to construction codes exceeding $10.00 per $100 payroll, and the savings potential is obvious.
Why Code 8742 is Frequently Misclassified
Top Reasons for Misclassification
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Intentional misuse to lower premiums
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Poor understanding of requirements
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Job duty creep over time
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Inadequate documentation
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Broker or agent errors
Most Common Reclassification
The most frequent audit change is 8742 → 8723 (Insurance Companies) when insurers determine the employee is integral to operations.
Expert Tip
Auditors don’t rely on job titles—they rely on payroll records, emails, and activity logs.
Real-World Scenario
A sales rep begins training new hires. Even without a “manager” title, supervision alone invalidates the classification.
The True Cost of Misclassification
Misclassification costs extend far beyond back premiums.
Direct Financial Impact
Retroactive premium bills are often the most immediate and painful consequence, requiring businesses to pay backdated costs for improperly classified payroll.
Audit penalty fees may be added on top of these adjustments, increasing the total amount due.
In many cases, insurers also apply interest charges, further inflating the financial burden and turning a classification error into a significant cash-flow issue.
Experience Modification Damage
An injured employee improperly classified under this code can severely inflate your ExMod, increasing premiums for three years or more.
Legal & Reputational Risk
Coverage disputes can arise when insurers question whether an injury should have been covered under an improperly assigned classification, potentially delaying or denying claims.
Regulatory scrutiny may follow if misclassification is viewed as a compliance issue, exposing the business to fines or corrective actions.
Over time, repeated classification problems can also lead to carrier distrust, making it harder to secure favorable terms, competitive rates, or even renewal approval.
A single severe claim can outweigh years of premium savings.
How to Properly Document and Maintain Code 8742 Classification
Documentation is your strongest defense.
Best Practices
Detailed job descriptions should clearly define field-only, non-supervisory duties to set expectations and support proper classification.
Signed employee duty acknowledgments confirm that workers understand and follow these role limitations.
Maintaining consistent time and activity logs further strengthens documentation by showing where and how work is performed, which is critical during audits.
Records to Maintain
Mileage and travel logs help verify that work is performed exclusively in the field, while client visit notes document the purpose and location of each interaction.
Sales call records provide additional proof of clerical-type sales activity, and clearly defined territory assignments demonstrate structured, non-supervisory field responsibilities during audits. Handling Hybrid Roles
If duties change, split payroll or reclassify immediately.
Expert Tip
Conduct quarterly internal audits to catch role changes before insurers do.
Preparing for a Workers’ Comp Audit
Auditors scrutinize this code closely.
What They Review
Job descriptions are examined to confirm that duties align with field-based, clerical work, while payroll records are analyzed to ensure wages are properly assigned to the correct classification.
Expense reports and vehicle reimbursements are also reviewed closely, as they often reveal work locations, travel patterns, or delivery activities that could trigger reclassification.
Red Flags
Mixed duties raise immediate concerns because even occasional office or operational work can invalidate the classification.
Office access badges suggest on-site activity, while internal emails showing supervision or management responsibilities often provide auditors with clear evidence that the role does not meet eligibility requirements.
You have the right to request worksheets and dispute findings with documentation.
Strategic Tips for Maximizing Your 8742 Classification Benefits
To legitimately maximize the benefits of this classification, roles should be structured intentionally from the outset.
Job duties, reporting lines, and daily activities must be designed to support full-time field work with no operational or supervisory overlap.
Clear boundaries prevent job duty creep, which is one of the most common reasons classifications fail during audits.
Using pay-as-you-go payroll systems can further reduce risk by aligning premium calculations with real-time payroll data.
This approach improves cash flow, minimizes large year-end audit adjustments, and creates a transparent payroll trail that auditors can easily verify.
Working with classification-savvy brokers is equally important. Not all agents understand the nuances of low-risk field classifications, and an experienced broker can help interpret state-specific rules, draft defensible job descriptions, and address auditor questions before they escalate.
Technology also plays a key role. CRM tools, mileage tracking apps, and activity logs help track duties and work locations, providing objective evidence that employees remain compliant with classification requirements.
These systems create time-stamped records that are highly persuasive during audits.
Finally, classifications should be reviewed at least annually, and immediately after any role changes.
A periodic professional classification review is far cheaper than correcting errors after an audit, especially when retroactive premiums, penalties, and long-term rate increases are involved.
Conclusion
Correctly using workers compensation class code 8742 can dramatically reduce premiums—but only when applied with precision. Misclassification leads to audits, penalties, and long-term cost increases that far outweigh short-term savings.
The key is documentation, role clarity, and ongoing review. If your business relies on outside sales or field-based professionals, now is the time to audit your classifications and confirm compliance.
When in doubt, consult a workers’ comp professional. The cost of getting it wrong is simply too high.
FAQs
1. Can delivery drivers ever qualify for 8742?
No. Any product delivery disqualifies the classification.
2. What if my salesperson occasionally works in the office?
Even occasional office work may invalidate eligibility.
3. How do I handle commission-only salespeople?
They’re classified based on duties, not pay structure.
4. What happens if I disagree with a reclassification?
You can formally dispute with documentation and worksheets.
5. Is 8742 available in all states?
Most states recognize it, but rules vary.
