What a workers' comp class code is

A workers' compensation class code, or classification, is the number that places a business in a group of similar employers so payroll and losses can be counted and priced together. California uses the Standard Classification System of the WCIRB, which has approximately 700 industry classifications.

The WCIRB says the system exists so insurance costs can be spread as fairly as possible: payroll and loss data are divided into groups that match the premium to the average risk of injury in that kind of work. The Standard Classification System is in Part 3 of the Uniform Statistical Reporting Plan, which is part of the California Code of Regulations and approved by the Insurance Commissioner. An insurer may deviate from it for underwriting, but for data reporting every insurer uses the standard system. Each classification has an advisory pure premium rate per $100 of payroll, calculated by the WCIRB from loss and payroll data and amended at least annually. That rate reflects expected losses, so it is a reference point for insurers, not a quote for your business.

For most industries, the WCIRB says, classification is assigned by looking at the employer's overall California operations and choosing the one classification that describes the business as a whole, so most employers have only one. Some industries have special classification procedures. For contractors, the Contractors State License Board requires licensees to list up to the top three workers' compensation classification codes with the highest estimated payroll reported on the policy (Business and Professions Code §7125.6, as described by CSLB). CSLB adds that one policy can cover several businesses, that the code reported for a license may not match the license classification, and that CSLB does not verify the accuracy of the codes it displays.

The class code matters at audit. If the code does not describe the work actually performed, the premium and the payroll audit can change. Give the agent a plain description of what each employee does, and say so when a worker moves between kinds of work. See workers' comp payroll audit and workers' compensation.