Class code

A class code is a four-digit number that describes what an employer's employees do. In states that use NCCI, each code in the Scopes Manual carries a rate or loss cost per $100 of payroll that reflects the claim costs for that kind of work. Workers' compensation premium is roughly payroll divided by 100, times the class rate, times the experience modification rate. Clerical office employees (8810) cost a small fraction of what roofers or tree trimmers do.

Say, in a hypothetical, a plumbing contractor (5183) has $400,000 of plumber payroll at a rate of $2.50 per $100 and a 0.90 mod. Premium is 4,000 (payroll ÷ 100) × $2.50 × 0.90, or $9,000. Employees who spend their time in the field belong in the contractor's code, not in clerical, though standard exception classes such as clerical (8810) and outside sales (8742) are allowed for people who truly meet the definitions.

Misclassification is the big pitfall. The carrier's premium audit checks payroll by class against actual duties, and it can move people to higher-rated codes after the fact, with the extra premium billed to you. Some states, including California, New York and Pennsylvania, use their own bureaus and codes. General liability has separate five-digit ISO class codes too. Ask your broker to confirm each code against your operations. The guide on workers' comp class codes and why they matter covers how to challenge one, and the workers' comp premium calculator shows the arithmetic.