Class Codes:  Frequently Asked Questions...

 

If you have a general question about "Class Codes" that is not answered here,  please submit it to us and we will gladly get back to you with an answer.  

What is Manual Rating?

Per NCCI, "all employers are grouped according to their business operation or classification. The estimated losses of the group are added together, and an average cost is obtained. The rates determined for manual rating are averages reflecting the normal conditions found in each classification. An employer is assigned to a classification to ensure that the rates reflect the costs of all employers with similar characteristics."

What is a Governing Class Code?

The operation or business of the insured that results in the majority of payroll is normally considered to be the principal business of the insured.  This is what it is used to determine the governing class code and the basis for the calculation of your premium.

What is a Standard Exception?

There are a few exceptions to the standard scopes classifications that appear commonly in almost every type of business.  These are referred to as "Standard Exceptions" and are permitted to be classed separately from your governing class code, unless specifically stated.  A couple of examples are:

 

Clerical Office Employees NOC

Drivers, Chauffeurs, Messengers, and their Helpers NOC

Salespersons or Collectors - Outside

What is Not Otherwise Classified (NOC)?

Many times, you will find that your firm has been assigned a class code that has a NOC at the end of the class code description.  If you see this on your workers Compensation policy, it means that a more specific class code for your operations could not be determined for your firm.  

Is there a penalty for purposely "Misclassifying" employees to get a lower rate?

Misclassifying employees to lower premiums or treating employees as subcontractors when they are not to hide or conceal payroll is a criminal violation of 440.105 and constitutes a felony of the first, second or third degree depending on the monetary value of the fraud as provided in s. 775.082, s. 775.083, or s. 775.084.

 

440.105 - To knowingly misrepresent or conceal payroll, classification of workers, or information regarding an employer’s loss history which would be material to the computation and application of an experience rating modification factor for the purpose of avoiding or diminishing the amount of payment of any workers’ compensation premiums.

What if I do not agree with a class code that has been assigned?

Per NCCI,…… A policyholder who believes that an NCCI rule or classification code has not been properly applied by their carrier to their workers compensation insurance policy can request NCCI's assistance. If a carrier is unable to resolve a dispute with a policyholder, that carrier has a duty to inform the policyholder about NCCI's dispute resolution services, which are designed to provide an opportunity for policyholders and carriers to resolve disputes without the need for litigation.

Can an employee fall under more than one classification?

If an employee performs multiple duties, they must be classified in the highest-rated classification that they perform.

For Example, if an employee works in the office doing clerical duties, but also regularly travels to meet with customers,  they would fall under the higher rated Outside Salesperson classification for all of their payroll.  

There are a few exceptions to this rule.  For Example:

1.  Bill's Lawn and Landscape Company has an employee that performs lawn maintenance, new landscaping and tree trimming.  If their payroll records are properly documented, they can pay the appropriate rate for each type of work they are doing.

2.  Gina's Pizzeria has an employee that works inside a restaurant and also does delivery.   If their payroll records are properly documented, they can pay the restaurant rate for the inside work and the delivery rate only while delivering.

3.  In the construction industry,  if your payroll records are properly documented, you can utilize multiple rates for the same employee doing different types of work, as long as the class code allows it.

Is there a different rate for a tradesman, a lhelper and a laborer on a jobsite?

No, the rate is based on the class code that best describes the overall work, by that employer, being performed on the job-site.  It is possible to have multiple classifications assigned for different "trade" employees doing different types of  "trade" work on a job-site (subject to class code restrictions).  But, the rates for a tradesmen/helper and laborer are all based on the same overall work being performed by the group.

How do I classify pay for time not worked - Holiday Pay / Sick Pay / Vacation Pay?

Employees may have payroll that is provided to them for periods that they are not actually working.  A couple of good examples of this would be holiday pay, sick pay and vacation pay.  This pay would be classified under their normal class code that is assigned to them.  If they perform multiple duties, it would fall under their "governing class code", or the classification that best describes their duties for the majority of their time working.er here

How is an uninsured subcontractor classified?

An uninsured subcontractor is classified based on the work that they perform.  It would be the same as if they were an employee of the firm that does have the workers' compensation insurance.

For example, if a trim carpenter has their own insurance and does trim carpentry only, they would fall under the trim carpentry rate.  However, if they are uninsured and working under a residential contractor, they will fall under the higher rated residential carpentry classification.  They cannot be classified as trim carpentry, since the residential carpentry class code includes trim carpentry. 

 

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