Glossary  /  Classification & payroll

Class code

Also called classification code, workers comp class code

A class code is a four-digit number that groups businesses or job duties by the hazard of the work, and determines the rate applied to payroll assigned to it.

Classification follows what the work actually is, not job titles and not what the business calls itself. Two people at the same company can carry different codes if their duties genuinely differ.

Assignment is driven by the business's operations as a whole, with certain support roles separated out where the rules allow it. Getting this wrong in either direction is a problem: too high and the business overpays every month, too low and the correction arrives at audit.

Why it matters at audit

Classification is the single largest lever on workers' compensation premium, because it selects the rate that everything else multiplies against.

Related terms

  • Governing classificationThe governing classification is the class code that best describes a business's principal operation, and the one that carries the most payroll aside from standard exceptions.
  • Division of payrollDivision of payroll is the practice of splitting one employee's wages across multiple class codes when they genuinely perform work in more than one classification.
  • Rate per $100 of payrollWorkers' compensation rates are expressed per $100 of payroll, so a rate of 7.50 means $7.50 of premium for every $100 paid to employees in that classification.

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