Glossary  /  Classification & payroll

Division of payroll

Also called class code split, payroll allocation

Division 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.

Where a state permits it, the split has to be supported by actual records — time cards, job costing, or a daily log showing how hours broke down. An estimate or a verbal description does not qualify.

Without supporting records, most states require the entire payroll to be assigned to the highest-rated classification the employee worked in.

Why it matters at audit

For businesses whose staff move between trades, this is usually the largest single swing available at audit, and it depends entirely on records kept during the year rather than reconstructed afterward.

Related terms

  • Class codeA 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.
  • 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.
  • Audit basisThe audit basis is the final payroll figure, by class code, that premium is calculated against once inclusions and exclusions have been applied.

Back to the premium audit glossary