Class Codes for Dummies
Staffing & Workers' Compensation Class Codes
Ever wonder how a company gets their governing class code? The most common misconception is that a company is classified by their employees’ job functions. That statement is completely false (at least for the most part).
Class codes are determined by the main operations of the company. For example, say a company is in the business of manufacturing clothing and an employee will only be packaging the final product. That employee will be classified under the company’s governing code of 2501 – cloth, canvas
But of course, there are exceptions, such as:
- Clerical Employees. If the employees you place work in the office of a company, they’re separately classified as clerical employees – class code 8810.
- Sales Employees. If the employees you place are part of the outside sales force of your client, they’re separately classified as a salesperson – class code 8742.
- Drivers. If the employees you place drive a truck which delivers your client’s product, then they’re classified as a driver – class code 7380.
- Specific Class Rules. The above three exceptions are not to be used if the classification definition states otherwise (the classification will state if clerical, sales and drivers are included).
Let’s go back to our first example with the clothing manufacturing company (2501). Now say you place an employee who’s working at the front desk as a receptionist. This employee will be classified as class code 8810.
Now, I bet you’re thinking this is super easy, right? Not so fast! There are plenty more twists. Just to name a few:
- State-Specific Coding. Not all 50 states share the same rating system. Most use NCCI, but others have their own like California (FYI: the third exception above – 7380 – isn’t even applicable in California).
- Number of Digits. Pennsylvania and Delaware’s class codes are only three digits where all other states have four.
- Construction. This category is a whole other ball game. Construction is not classified by the company; it’s what the employees are doing. Say, the company is just a general residential contractor, but your employees are painting the interior of the house. You’re going to want to use code 5474 (Painting NOC) versus 5645 (Carpentry – Construction of Residential Dwellings Not Exceeding Three Stories in Height)….and yes, there’s a separate code for over three stories (5403).
- All Employees. When the phraseology of a class code includes “All Employees” – this actually doesn’t mean “All” employees. It doesn’t contemplate exception codes (clerical, salespeople, drivers, etc.).
And the list goes on, but I’m sure you don’t have time for that!
Lucky for us, we have some resources like NCCI that provide a starting point for determining the right class codes. However, NCCI can be wrong sometimes (trust me; I’ve seen where they’ve classified trucking companies as clerical – yikes). It’s always best to do your research and make sure all of your ducks are in a row.
Now get to classifying!
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