Definition of Workers’ Comp Class Codes

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What are workers’ comp class codes?  

Class codes are a compilation of job definitions designed to accurately identify various workplace exposures. Each specific job classification is assigned a 4-digit number. Each workers comp code has its own rate for the purpose of calculating premium on a policy. The resulting pure premium rate for the classification reflects the average anticipated cost of benefits, per every $100 of payroll, incurred by businesses within the particular industry.

Why are workers’ comp class codes important to a small business?

Workers’ comp class codes allow insurance companies to measure risk among their customers — and also price workers’ compensation insurance policies.

  • Workers’ comp rates are lower for office employees because their work-related injuries are less frequent/severe.
  • Workers’ comp rates are higher for companies that have a greater chance of physical injury (ie. construction, transportation, manufacturing, etc).

Class codes are the most significant factor in determining an employer’s workers’ comp insurance rates.

What is the history of workers’ comp class codes?  

The National Council on Compensation Insurance (NCCI), an advisory organization supported and funded by insurance providers, created workers’ comp class codes.

The NCCI continues to establish and maintain workers’ comp codes for hundreds of thousands of employers across the United States. Some states have rating bureaus that oversee their own sets of workers’ comp codes.

Other terms similar to workers’ comp class codes that can assist you 

Workers’ compensation: Workers’ compensation is an employer-paid insurance that covers lost wages and medical costs owed to employees who suffer a work-related injury or illness.

Workplace disability: The ADA defines a person with a disability as someone who a physical or mental impairment that seriously limits one or more major life activities, or who is regarded as having such impairments.

Summary of the definition of workers’ comp class codes

Class Codes are a compilation of job definitions designed to accurately identify various workplace exposures for workers’ compensation — resulting in a 4-digit number for each specific job classification.

People also ask

If I only pay independent contractors, should I to apply for a state identification number and contribute to my state’s workers’ compensation insurance fund?

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