The Workers' Compensation Malclassification Duck Walk

I did not create the word “malclassification.” It is a word used by the University of Wyoming Law Professor Michael Duff, during the recent ABA Mid-Winter Workers’ Compensation Conference in New Orleans. He was discussing the challenges of adequately providing worker protection in the gig economy, as well as other independent contractor scenarios. He discussed the misclassification of employees, saying he really preferred the word malclassification. 

He may be on to something. There can be a significant difference between the two.

Misclassification of workers has been a significant problem in the workers’ compensation industry. Class codes affect premiums, which are designed to cover the expected risks of insuring a particular employer. When an employee is misclassified, it affects the viability of the system by potentially introducing risk that has not been properly accounted for. And when that improper classification is intentional, the “mis” definitely should be considered the “mal.”

Not all misclassification is intentional. Probably the best example of what I suspect is common misclassification today is the result of the recent pandemic. You remember the pandemic, don’t you? It was all the rage before Russia invaded Ukraine. Putin’s egregious actions apparently solved the Covid problem, as we haven’t heard a word on it since. But I digress. Where was I? 

Oh, yes. Unintentional misclassification. A result of the pandemic is that many more people now work from home on a permanent basis. As an example, these workers could very well have been classified under code 8810 (Clerical Office Employees NOC). In reality, those same people should now be classified under code 8871 (Clerical Telecommuter Employees). If the classifications were not corrected during an audit or at some other point with the insurer, that is an example of misclassification.

However, if those employees listed under code 8810 are actually 9088 (Rocket or Missile Testing or Launching & Drivers), or 5473 (Asbestos Removal Operations - Contractor - NOC & Drivers), then you are looking at a severe case of malclassification. As with so many things, intent is the catalyst that defines the difference between the two. 

And that intent matters. The intentional fraud of misclassification is in fact rife with malintent. It is cheating both the workers and the system established to protect them in the event of an accident on the job. It is a criminal act and should in fact be treated as such. At the very least, our industry should adopt the phrase to define the difference and to drive the point home when such fraud is encountered. 

There are a couple of useful phrases that come to mind to describe this issue. In 1964, Supreme Court Justice Potter Stewart, in discussing obscenity, said, "I shall not today attempt further to define the kinds of material I understand to be embraced... but I know it when I see it." That is sometimes the way we can feel when viewing the results of intentional misclassification. The other useful idiom, in this case, is, “if it looks like a duck, walks like a duck, and sounds like a duck, it’s a duck.” Even though today, the word “malclassification” only seems to exist in the French language and Professor Duff’s writings, it is a word we should start applying in the appropriate circumstances. After all, we should know this when we see it, and there should be a difference in the way we treat an unintentional misclassification, and someone doing a malclassification duck walk.

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