Rule 1 - Assignment of Classifications

Revision History
Type	Effective Date	Circular	Notes
Revision	07/01/2021	C-21-12	Revisions to North Carolina Basic Manual for Workers Compensation and Employers Liability
Revision	04/01/2021	C-20-16	NCCI Item B-1439 - Revisions to Basic Manual – Classifications and Appendix E, Including Construction Salespersons and Estimators
Revision	04/01/2021	C-20-2	NCCI Item B-1438 - Revisions to North Carolina Basic Manual - Classifications for Oil and Gas Field Operations
Revision	04/01/2021	C-19-7	NCCI Item B-1437 - Revisions to North Carolina Basic Manual Classifications and Appendix E - Classifications by Hazard Group, Including Aircraft Maintenance
Revision	03/30/2020	C-20-17	Revisions to North Carolina Basic Manual Rules Related to the COVID-19 (Coronavirus) Pandemic
Revision	04/01/2019	C-18-23	NCCI Item B-1436 Revisions to North Carolina Basic Manual Classifications and Appendix E - Classifications By Hazard Group
Revision	10/01/2017	C-17-6	NC Basic Manual NCCI Item B-1433 - Part 1 Rules 1 and 2
Original	04/01/2016	C-16-6	North Carolina Basic Manual for Workers Compensation and Employer Liability - Digital Edition

A. Classification System

1. The objective of the classification system is to group employers with similar operations into classifications so that:

a. The classification reflects the exposures common to those employers

b. The rate for each classification reflects the loss exposure common to those employers

2. Subject to certain exceptions, it is the business of the employer within a state that is classified, not the separate employments, occupations, or operations within the business.

B. Classification Explanation

Classifications are divided into two types – Basic Classifications and Standard Exception Classifications.

1. Basic Classifications

Basic Classifications describe the business the employer is operating. Except for the Standard Exception Classifications, the term basic classification is applied to all classifications shown in this manual.

Examples of classifications that describe the business of the employer:

Business	Classification
Manufacture of a product	Furniture Manufacturing
A process	Engraving
Construction or erection	Carpentry
A mercantile business	Hardware store
A service	Beauty salon

2. Standard Exception Classifications

Standard Exception Classifications describe jobs or occupations that are common to many businesses. These common occupations are not included in the basic classification unless specified in the classification wording. These classifications are described below.

a. Clerical Office Employees NOC (Code 8810) and Clerical Office Telecommuter Employees (Code 8871)

The above classifications are assigned when all the following conditions are met:

The basic classification wording does not include clerical office or telecommuting employees
Other rules do not disallow the assignment of Code 8810 or Code 8871
The employee meets the duties, site, and other requirements listed below:

1) Duties

Duties must be limited to the following work activities:

Creation or maintenance of:
- Correspondence
- Computer programs
- Employer records
- Files
Telephone duties and/or telephone sales
Data entry
Operation of copy or fax machines, unless the insured is in the business of making copies or faxing for the public
General office work similar in nature to the above

2) Site

a) Code 8810 – The duties listed in Rule 1-B-2-a (1) must take place in a work area that is separated from the operating hazards of:

Factories
Stores
Shops
Construction sites
Warehouses
Yards
Any other work areas such as:
- Work or service areas
- Areas where inventory is located
- Areas where products are displayed for sale
Areas to which the purchaser customarily brings the product from another area for payment

b) Work stations or service areas for Code 8810 must be physically separated from the operating hazards by at least one of the following:

Floors
Walls
Partitions
Counters
Other physical barriers that protect the clerical employee from the operating hazards of a business

c) Code 8871 – The clerical duties as defined in Rule 1-B-2-a (1) above must take place inside the home of the clerical employee. The location must be separate and distinct from the employer’s.

3) Other

a) Employees who meet the requirements for Code 8810 or Code 8871 will not be disqualified from assignment to these codes if they perform certain incidental non-clerical duties that are related to their employment. These duties include:

Making bank deposits
Picking up or delivering mail
Purchasing office supplies
Delivering paychecks or clerical-related documents to employees within an area exposed to the operative hazards of the business

b) Employees who otherwise meet the requirements for Code 8810 and Code 8871 will be disqualified from assignment to this classification if their duties involve:

Outside sales or outside representatives
Direct supervision of non-clerical employees not performed in an eligible site according to Rule 1-B-2-a (2) above
Physical labor
Work exposure to the operative hazards of the business that is incidental, necessary, or related to any business operations other than a clerical office

b. Drivers, Chauffeurs, Messengers, and Their Helpers NOC - Commercial (Code 7380)

This classification is assigned to employees who engage in duties on or in connection with a vehicle. Garage employees and employees using bicycles as part of their work duties are included in this code. Messenger and courier deliveries of documents and goods owned by the employer are assigned to the governing class code of the business when the deliveries are made by foot or public transportation.

Code 7380 does not apply when the basic classification wording includes drivers. Refer to Rule 2-H-3 for vehicles under contract.

c. Salespersons or Collectors - Outside (Code 8742)

This classification is assigned to employees engaged in sales or collection duties away from their employer’s premises.

This classification is not assigned to employees who:

Deliver merchandise
Use vehicles to deliver or pick up goods, even if they collect or sell. These employees must be assigned to the classification applicable to the business for drivers
Use public transportation or walk to deliver goods even if they collect or sell. These employees must be assigned to the governing classification applicable to the business
Travel between locations of the employer as district or regional managers to perform various duties not involving outside sales or collections. Refer to Rule 2-G-Interchange of Labor.
Perform job site measurements or inspections to prepare bids for a job for a construction contractor.

Code 8742 does not apply when the basic classification wording includes “Outside Salesperson” and/or “Collector”.

d. Automobile Salespersons (Code 8748)

This classification is assigned to employees who perform their duties on or away from the employer’s location. Types of transactions can include, but are not limited to, sale and/or long-term lease of:

Automobiles
Mobile Homes
Boats

These employees are subject to the same rules and treatment as Code 8742 – Salespersons or Collectors – Outside.

3. General Inclusions

General Inclusions are operations that appear to be separate businesses but are included within the scope of all basic classifications. These operations are not separately classified. They include the following:

Restaurants or cafeterias, stores, or day care services operated by the insured for employee use

Exception:

If these operations are conducted in connection with construction, erection, lumbering, or mining operations, they must be separately classified.
Manufacture of containers by the insured, such as bags, barrels, bottles, boxes, cans, cartons, or packing cases for sole use in the insured’s business operations
Medical clinics, facilities, or hospitals operated by the insured for its employees
Repair or maintenance of the insured’s buildings or equipment by the insured’s employees
Printing by the insured on its own products, packaging, brochures, or promotional materials
Piloting of unmanned aircraft systems or drone aircraft with a combined weight (including its attached systems, payload, and cargo) of less than 55 pounds

Exceptions:

(a) Autonomous drone aircraft computer system designers or programmers who qualify as clerical office employees in accordance with Rule 1-B-2-a and do not pilot or operate the drone aircraft are assigned to the appropriate clerical classification.

(b) If an employee qualifies as an outside salesperson in accordance with Rule 1-B-2-c, the piloting of the drone aircraft to support their sales duties is included within the classification assigned to the outside salesperson.

For employees that perform general inclusion duties for more than one basic classification, refer to Rule 2-G for classification treatment.
A general inclusion operation must be classified separately if any of the following conditions apply:

- It is conducted as a separate and distinct business of the insured (Rule 1-D-3).

- It is specifically excluded in the basic classification wording.

- The principal business is described by a standard exception classification.

Example of a General Inclusion Exception:

An internet service provider, classified to the standard exception Code 8810 – Clerical Office Employees NOC, operates a restaurant for its employees’ use. A restaurant operated for the insured’s employees is a general inclusion and usually not separately classified. However, because this business is classified to a standard exception classification, the restaurant operations must be separately classified to the appropriate restaurant classification.

4. General Exclusions

Some operations in the business are so unusual for the business described in the basic classification they must be separately classified even though the operations are not conducted as a secondary business. These operations are called general exclusions. They are classified separately unless they are specifically included in the basic classification. General exclusions are:

Aviation – all operations of ground and flying crews, including piloting of drone aircraft with a combined weight (including its attached systems, payload, and cargo) of 55 pounds or more
New construction or alterations
Stevedoring
Sawmill operations

Example of a General Exclusion:

An internet service provider, classified to the standard exception Code 8810 – Clerical Office Employees NOC, maintains a private plane, pilot and flight crew for the use of executives traveling to various work locations. The employer-provided aviation services are considered a general exclusion. This means that unless a classification applicable to the business includes aviation, this service is separately classified. Therefore, the aviation services provided by the internet service provider must be separately classified to the appropriate aviation classification(s).

Note:

COVID-19 Pandemic - Assignment of Classification Code 8871-Clerical Telecommuter Employees for Temporary Change in Duties

Operations of a higher-rated classification that have been amended to clerical telecommuting due to the North Carolina governor-declared stay-at-home order qualify to be assigned to Classification Code 8871-Clerical Telecommuter Employees for the duration of the stay-at-home order. This provision shall apply while the operations perform duties consistent with Code 8871's definition, from when North Carolina's stay-at-home order took effect on March 30, 2020 and for up to 45 days after the stay-at-home order has been lifted. This provision shall not apply to operations that meet the definition of a classification code that includes Clerical Office Employees.

5. Governing Classification

The governing classification at a specific location or job is the basic classification, other than a standard exception classification.

The governing classification is determined in accordance with the Governing Classification Determination Table.

Governing Classification Determination Table

If….	Then the governing classification is the …
A basic classification produces the greatest amount of payroll	Basic classification
A basic classification is applicable but no payroll is assigned	Basic classification
Multiple basic Classifications apply	Basic classification that is assigned the greatest amount of payroll
Multiple basic classifications apply but no payroll is assigned to any of the basic classifications	Basic classification that is the highest rated classification
A basic classification is not applicable	Standard exception classification that is assigned the greatest amount of payroll

The governing classification is used to determine the classification treatment of:

Miscellaneous employees
Local managers
Executive officers who regularly engage in duties that are usually performed by a foreperson, superintendent, or worker

Example of a Governing Classification:

A business has the following payroll amounts assigned to the following classifications:

$220,000 for Code 2003 – Bakery
$120,000 for Code 8017 – Store: Retail NOC
$240,000 for Code 8810 – Clerical

The governing code for this business is Code 2003 because it is the classification code, other than the standard exception code (8810), with the greatest amount of payroll.

6. Principal Business

The Principal Business is described by the basic classification with the largest amount of payroll.

If there is no basic classification other than the general inclusion or general exclusion operations, the standard exception operation that generates the largest amount of payroll is considered the principal business.

Examples of principal business and how it relates to governing classifications:

A business is involved in two separate operations, the preparation and sale of blasting agents and blasting excavation. Consider the following basic classifications and payrolls:
- Preparation and sale of blasting agents: Code 4777 – Explosive Distributor & Drivers. Total payroll = $500,000.
- Blasting operations: Code 6217 – Excavation. Total payroll = $200,000.

As this business performs multiple operations, the principal business is the basic classification with the greatest amount of payroll, Code 4777. In this example, the principal business and governing classification are the same.

A business is involved in drywall construction and has a qualified clerical office with an office manager and two clerks. Consider the following classifications and payrolls:
- Drywall construction: Code 5445 – Wallboard Installation Within Buildings & Drivers. Total payroll = $50,000.
- Clerical Operations: Code 8810 – Clerical Office Employees NOC. Total payroll = $75,000.

The governing classification and principal business in this example is Code 5445. Although Code 8810 has more payroll, according to Rule 1-B-5 and 1-B-6, the governing classification and principal business excludes standard exception classifications (i.e., Code 8810). See the following example for an exception to these rules.

An internet service provider, classified to the standard exception Code 8810 – Clerical Office Employees NOC, provides a child day care service for its employees. An employer-operated day care service is considered a general exclusion and must be separately classified to the appropriate child day care center classifications(s). Since the only basic classification of the business is represented by a general exclusion operation, the principal business is the standard exception classification, Code 8810.
A business is involved in three separate operations. Consider the following locations, basic classifications, and payrolls:
- Location 1: Retail shoe store. Code 8008 – Store: Shoe – Retail. Total payroll = $250,000.
- Location 1: T-shirt manufacturing. Code 2501 – Cloth, Canvas and Related Products Mfg. NOC. Total payroll = $300,000.
- Location 2: Wholesale hardware store. Code 8010 – Store: Hardware. Total payroll = $500,000.
- Location 2: T-shirt manufacturing. Code 2501 – Cloth, Canvas and Related Products Mfg. NOC. Total payroll = $100,000.

The governing classification at Location 1 is Code 2501, the basic classification at this location with the greatest amount of payroll. The governing classification at Location 2 is Code 8010, the basic classification at this location with the greatest amount of payroll. The principal business for the insured is Code 8010, the basic classification that has the greatest amount of payroll for all operations.

C. Classification Wording

The following list provides a description of how classification wording shall be used:

1. Classification Captions and Notes

The caption is the heading or the title of the classification.

The note is the phrase that follows the caption.

The classification wording as a whole, including the caption and note, controls, restricts, or explains the classification usage. The wording is also referred to as the "phraseology."

Example of a Classification entry:

Store: Fruit or vegetable – retail. No handling of fresh meats.

“Store: Fruit of vegetable - retail” is the caption in the above example.
“No handling of fresh meats” is the note.

2. Words and Phrases

a. All Employees, All Other Employees, All Operations, or All Operations to Completion

If any of the above phrases are included, no other classification can be assigned unless noted in the classification wording. This applies even if some operations or employees are at a separate location.

Exceptions:

The following operations of a business must be separately classified even if the classification wording includes “All Employees,” “All Other Employees,” “All Operations,” or “All Operations to Completion”:

Construction or Erection Permanent Yard (Code 8227)
Contractor – Project Manager, Construction Executive, Construction Manager, or Construction Superintendent (Code 5606)
Standard exception classifications, except when the basic classification includes the standard exception operation
General exclusion classifications
Any separate and distinct business (see Rule 1-D-3-c)

b. Clerical

Clerical means office employees and telecommuters, as defined in Rule 1-B-2-a.

c. Drivers

Drivers includes drivers, chauffeurs, messengers, and their helpers as defined in Rule 1-B-2-b.

d. “Includes” or “&”

If “includes” or “&” are in the classification wording, the operations or employees cited after those terms cannot be separately classified. Even if the operation or employees may be best described by another classification or are at a separate location, another classification cannot be used.

NOTE: If an insured has more than one basic classification, an employee’s payroll may be split among the codes appropriate for each operation. Refer to Rule 2-G for additional information regarding Interchange of Labor.

e. Local Manager

Local manager means an employee who is directly in charge of the operations in the yard of a business and is exposed to the hazards of the business. As such, the payroll of the local manager must be assigned to the governing classification unless another basic classification assigned to the business specifically includes this employee.

f. “No” or “Not”

A classification that includes a restrictive phrase beginning with “no” or “not” must not apply to any employer that conducts any operation described in the restrictive phrase.

Exception:

For mercantile, mining, construction, or oil and gas field operations, this rule applies to each job or location.

g. NOC (Not Otherwise Classified)

If “NOC” is included in the classification wording, then that classification applies only if no other classification more specifically describes the insured’s business.

h. “Or” or “And”

The term “or” also means “and”. This definition applies only to these terms as used in a classification’s caption or notes.

i. Salespersons

Salespersons and collectors as defined in Rule 1-B-2-c.

j. Stories in Height

Certain classification wording refers to “stories in height.” A story is defined as (15) feet in height. It is measured from the lowest point above ground level to the highest point above ground level.

k. To Be Separately Rated

If the classification wording contains the phrase “to be separately rated,” operations or employees referenced in those classifications must be classified separately.

For rules regarding the assignment of more than one basic classification refer to Rule 1-D-3.

l. Separate and Distinct Business

Separate and distinct business means an additional operation of the employer that is not included in the basic classification on the policy. Refer to the following:

Rule 1.D.3 for the assignment of more than one basic classification
Rule 3.A.5 for the combination of legal entities, separate locations, and operations on a single policy

D. Classification Procedures

The object of the classification procedure is to assign the one basic classification that best describes the operations of the employer within North Carolina. Subject to certain exceptions described in this rule, each classification includes all of the types of labor found within the business.

It is the business that is classified, not the individual employments, occupations, or operations within the business.

1. Separate Legal Entities

If multiple entities are insured under a single policy, the classification rules are applied separately to each of these legal entities.

2. Businesses Not Described by a Classification

If there is no basic classification that clearly describes the business, the classification that most closely describes the business must be assigned. For a business not described by any classification, provide the wording and code number of the classification that most closely describes the business in Item 4 of the Information Page of the policy. All the rules pertaining to the basic classification used must apply to this operation.

3. Assignment of More Than One Basic Classification

If an insured’s business meets the conditions of a, b, or c listed below, more than one basic classification may be assigned. Operation by definition means activities, enterprises, processes, secondary businesses, or undertakings.

a. The basic classification of the insured’s principal business requires certain operations or employees to be rated separately.

b. The insured conducts one or more of the following business operations:

Construction or erection
Farming
Employee leasing, labor contracting, temporary labor services
Mercantile business
Oil and gas field operations

c. The insured conducts more than one operation in a state.

1) An insured would be described as conducting more than one operation in a state if portions of the insured’s operations are not encompassed by the basic classification applicable to the insured’s principal business operation. For an insured’s additional business operations to qualify to be separately classified, these operations must meet all of the following conditions:

The operations must be able to exist as a separate business if the insured’s principal business ceased to exist.
The operations must be separated from the principal business, such as in a different building or on the same floor but physically separated from the principal business by walls or partitions. Employees engaged in the principal business must be separated from the operating hazards associated with the additional operations.
Separate payroll records must be properly maintained for each of the operations. Refer to Rule 2-G for additional information.

Example of two operations that could qualify as two separate businesses:

An insured operates bowling lanes and a movie theater within the same state. These distinct operations can qualify as two separate businesses for classification purposes because:

The operations of bowling lanes and movie theaters are not ordinarily conducted as one business and, therefore, are not included within each other’s scope
Either the bowling lane (if the movie theater ceases to exist) or the movie theater (if the bowling lane ceases to exist) can be expected to continue its operations

2) Additional operations not encompassed in the insured’s principal business must meet all the conditions listed above in Rule 1-D-3-c (1) for the insured to be considered engaged in an additional operation. In these instances, a separate basic classification may be assigned to each operation that qualifies as a separate additional operation.

3) Additional operations that do not meet all conditions listed above in Rule 1-D-3-c (1) have a rate:

Lower than the insured’s principal business, then all operations must be assigned to the classification of the insured’s principal business
Higher than or equal to the insured’s principal business, then all operations must be assigned to the classification that describes the additional operation.

4) Policies with more than one classification may include employees working under several classifications. Payroll for these employees is subject to the Interchange of Labor rule. Refer to Rule 2-G.

NOTE: If the insured does not provide verifiable payroll records specific to the additional higher rated operation, then the principal and the additional operations are both assigned to the higher rated classification. For a description of proper payroll records, refer to Rule 2-G-2.

d. Construction, Erection, or Oil and Gas Field Operations

Each type of construction, erection, or oil and gas field operation must be assigned to the classification that describes the operation only if separate payroll records are maintained for each operation.

If separate payroll records are not kept for any construction, erection, or oil and gas field operation, the highest rated classification that applies to the job or location where the operation is being performed must be used.

If a construction, erection, or oil and gas field operation is included in the scope of another classification, a separate code cannot be used.

1) Insured Subcontractors

Insured subcontractors who perform a single type of work on a construction project or job must be classified based on the classification that describes the type of work involved.

Exception:

All concrete construction operations including making and erecting forms, placing reinforcing steel, and stripping forms, when done by subcontractors, must be classified to the appropriate concrete construction code.

Example of how to classify the work performed by an insured subcontractor:

The insured subcontractor who performs only excavation work in connection with the construction of a sewer is classified under Excavation (Code 6217) rather than under Sewer Construction (Code 6306).

2) Uninsured Subcontractors

Uninsured subcontractors covered under the principal or general contractor’s policy are classified based on the classifications that would apply if the work were completed by the principal’s or general contractor’s employees.

Example of how to classify the work performed by an uninsured subcontractor:

The uninsured subcontractor who performs only excavation work, but is covered under the policy of the principal contractor performing the construction of a sewer, is classified under Sewer Construction (Code 6306).

3) Construction - Job Site Salespersons and Estimators

Construction job site salespersons and estimators are separately rated to Code 8720, a nonconstruction code. A division of payroll is not permitted between Code 8720 and a construction classification at any single job site. If the construction job site salesperson or estimator also performs construction duties at the same job site or supervises construction workers at the same job site, the employee’s payroll at that job site must be assigned to the appropriate construction classification.

e. Farm Operations

A farm is described as any parcel(s) of land used for the purpose of agriculture, horticulture, viticulture, dairying, or raising of stock or poultry, for business or commercial purposes.

A division of payroll is allowed for each separate and distinct type of commercial farming operation if separate payroll records are maintained.

If separate payroll records are not maintained for the commercial farming operations or the records are not clear, the entire payroll of the farm must be separated on the basis of proportionate acreages.

Each farm classification includes:

All employees
Drivers
Normal repair and maintenance of buildings or equipment performed by the employees of the insured
Operations usual and incidental to a farm, such as:
- Maintenance of chickens, cows or hogs for family use
- A family orchard or truck garden
- Hay or grain crops raised for the purpose of feeding work animals on the farm
- Outside domestic workers at the farm location

Each farm classification excludes inside domestic workers at the farm location.

f. Employee Leasing Firms, Labor Contractors, Professional Employer Organizations, and Temporary Labor Services

1) Leased workers must be classified the same as direct employees of the client performing the same or similar duties.

2) If the client has no direct employees that perform the same or similar duties, the leased workers are classified as if they were direct employees of the client entity.

Example of how to classify workers assigned to clients of employee leasing companies, labor contractors, and temporary labor services:

The client is a retail store classified to Code 8017:

Code 8017 is applicable to the worker assigned as a cashier, just as it is applicable to the client’s employee who works as a cashier.
Code 7380 is applicable to the worker assigned as a delivery truck driver, just as it is applicable to the client’s employee who drives a delivery truck.

g. Mercantile Businesses

A mercantile business is any store or dealer engaged in the sale of goods or merchandise or in the sale of services. Each location of the mercantile business is separately classified.

Operations of a store are classified based on the principal type of merchandise sold and whether the operations are wholesale or retail. For this rule, principal means more than 50% of gross receipts, excluding sale of lottery tickets.

The definitions and instructions below must be considered when determining the appropriate store classification.

1) Type of Merchandise Sold

If a store sells different types of goods, each of which may be subject to a different classification, the store is to be assigned to the classification that best describes the merchandise that generates more than 50% of gross receipts.

2) Wholesale vs. Retail

For classification purposes, the term “Retail” is defined as the sale of merchandise to the general public for personal or household consumption or use and not for resale.

For classification purposes, the term “Wholesale” is defined as the sale of merchandise for resale to others or sales to builders, contractors, manufacturers, or others for use in their business or as raw materials.

Exception:

If a store’s sales are clearly retail in nature, the appropriate classification for the retail store may be assigned regardless of the definition of retail above.

Examples of store sales that are clearly retail in nature:

A store selling artwork in a shopping mall whose majority of sales are for artwork purchased by businesses
A store selling art supplies in a shopping mall whose majority of sales are to artists who use the materials in their business

In these cases, the stores would clearly be classified as retail except for the ultimate use or purchaser of the products.

3) Combination of Retail and Wholesale

A store that sells merchandise on both a wholesale and retail basis must use a classification that is based on whether the majority of gross receipts come from wholesale or retail sales.

4. Standard Exceptions

Standard Exceptions must be separately classified unless specifically included in a classification assigned to the business. Standard exception classifications apply even if the basic classification includes phrases such as “all employees” or “all operations.”

5. Businesses Described by a Standard Exception Classification

If the principal business is described by a standard exception classification, the operations of all employees not included in the definition of a standard exception classification must be assigned to the separate basic classification that most closely describes their operation.

This rule applies to both an employer's business within a state and to individual jobs or locations where the governing classification is described by a standard exception classification.

Example of principal business that is described by a standard exception code:

The insured is a public museum:

Professional and clerical employees are assigned to Code 8810
Maintenance employees are assigned to Code 9101
Gift shop employees are assigned to Code 8017

6. Classifications Limited To Separate and Distinct Businesses

The assignment of certain classifications is limited by their classification notes to separate and distinct businesses. The notes may describe an operation that frequently is an integral part of a business described by another classification.

7. Repair Operations

Insureds with shop operations that involve the repair of a product for which there is no repair classification are classified using the classification code that best describes the manufacturing of the product, unless the repair work is specifically referred to by another classification, footnote, or definition in the manual.

Example of repair operations that are classified to the manufacturing code:

A pump repair business is assigned to Code 3612 – Pump Mfg. There is no separate code for pump repair.
A motor repair business is assigned to Code 3643 – Electric Power or Transmission Equipment Mfg. There is no separate code for motor repair.

8. Recycling Operations

a. The collection, sorting, and handling of recyclable materials for resale to others must use the appropriate store or dealer classification or the classification that most closely describes the business.

b. Insureds whose operations involve the reuse of materials for the production of a new product are classified using the classification code that applies to the manufacture of the new product unless the work is specifically referred to by another classification, footnote, or definition in the manual.

E. Miscellaneous Employees

1. Miscellaneous employees who perform duties that are commonly performed for separate operations that are subject to more than one basic classification must be assigned to the governing classification.

2. Miscellaneous employees include but are not limited to the following:

a. General superintendents other than construction executives that meet the requirements of Code 5606 – Contractor – Project Manager, Construction Executive, Construction Manager, or Construction Superintendent

b. Maintenance or power plant employees

c. Shipping or receiving clerks

d. Yard workers other than construction yard employees properly assigned to Code 8227 – Construction or Erection Permanent Yard

NOTE: If the governing class code is a standard exception, refer to Rule 1-D-5 for additional information.

Example of classification for miscellaneous employees:

The insured has two separate operations: a machine shop (Code 3632) on one floor of the building and a plastics manufacturing business (Code 4452) on another floor. If it is determined that Code 3632 is the governing classification, all elevator operators, porters, cleaners, superintendents, and shipping clerks serving both operations are assigned to Code 3632.

F. Classification Changes or Corrections

1. Classification changes due to changes in an insured’s operations will be applied as of the date the change in operations occurred.

2. Classification corrections that result in a decrease in premium, whether determined during the policy period or at audit, must be applied retroactively to the effective date of the policy.

3. Classification corrections that result in an increase in premium, must be applied as follows:

If the correction in classification is effective…	Then the correction is applied…
During the first 120 days of the policy term…	Retroactively to the inception of the policy.
After the first 120 days of the policy term, but before the final 90 days…	As of the date the carrier discovers the cause for that correction.
During the last 90 days of the policy term…	Only to a renewal policy, if any.

The effective date of change, for purposes of the time periods noted in the table above, is the date a carrier applies a classification change.

Exceptions to the table above:

a. If the classification correction is the result of an omission or misrepresentation by the insured, its agents, employees, officers, or directors, then the correction must be applied from the date on which the change would have applied if such omission or misrepresentation had not occurred.

b. The above rules do not apply to the following types of operations; therefore, classifications are assigned and applied at any time during the term of the policy or at audit:

Construction or erection
Oil and gas field operations
Employee leasing
Labor contracting
Temporary labor services
Professional employer organizations
Operations assigned to standard exception classifications
General exclusions

4. For purposes of Rule 1-F, the reallocation of payroll among classifications on the policy is not considered a change or correction in classification(s).

Example of reallocation of payroll:

An insured has Codes 8810 and 3632 on its policy. Jane Doe has been reported in 8810 by the insured. The auditor discovers that she cleans the office and reassigns her payroll in 3632. This is permissible because Code 3632 was already on the policy.
An insured has Codes 3179 and 3076 on its policy. John Doe has been reported in 3179. The auditor discovers that John Doe interchanges between 3076 and 3179 operations and there is no division of payroll. Code 3076 is the higher rated code. It is permissible to reassign all payroll from 3179 to 3076 because 3076 was already on the policy.

Note:

COVID-19 Pandemic - Assignment of Classification Code 8871-Clerical Telecommuter Employees for Temporary Change in Duties

5. No request to change classification(s) on the grounds that the risk has been improperly classified will be considered by the NCRB unless:

The request is submitted directly to the Bureau, by the insured or by the carrier, and
The request is made during the term of the policy or within twelve months after the expiration date thereof.

As provided in the standard workers compensation and employers liability policy, the insurance carrier is permitted to audit or re-audit within three years after termination of the policy. The revised audit may be for the purpose of reallocation or amendment of the payroll or other premium basis, according to the rules, rates, and rating plans applicable under the manuals used by the carriers at the time the policy was terminated.