One of the fundamental aspects of pricing workers' compensation insurance is the process of classifying different workplace exposures into a system of codes. Each one of these codes has an individual rate dependent on the risk of that workplace exposure. For example, the classification code for a clerical worker has a significantly lower rate than the one used with the code for a roofer, because the average workplace exposures of those two types of employment are obviously quite different. When you move beyond such obvious examples, the question of proper classification of workplace exposure can become more complicated. Incorrect classification of workplace exposures is common and it can be an expensive mistake for a business.

In Florida, the classification system used is devised and maintained by NCCI, the National Council on Compensation Insurance. NCCI is an independent organization known as an "Advisory Organization" (some insurance people still incorrectly refer to it as a "Rating Bureau"). NCCI is largely funded by insurance companies, and insurance company executives make up a majority of its board members.

NCCI has devised a system of approximately 700 classification codes, intended to cover workplace exposures. NCCI devises the manuals and rules regarding the classifications that are used in most states, and also is responsible for determining the correct classifications for particular employers. In addition, Florida has some "state special" classifications that vary from the NCCI definitions for certain workplace exposures.

Employers can use more than a single classification code on a policy, because the NCCI has established that workplace exposures are eligible to be broken out into their own classification. Employees can be grouped into their classifications and their payroll will be rated accordingly. Multiple classifications may also be assigned to the same employee, depending on the actual work done. But in this case, work records must show specific hours at the various tasks for a worker's time to be split between the appropriate classifications.

Determining the proper classification code for a particular employer is not always easy, even for NCCI. This reflects the complexity of the classification system. Sometimes small details can make a big difference in which classification code is used, which in turn can make a big difference in rates and premium. As a business owner, it is important to understand the codes under which your employees are classified and make sure the definition includes the work they perform.

The details of this NCCI classification system are not available online either. NCCI views that the manual, known as the Scopes manual, is proprietary information and it is copyrighted material. It is available to purchase from them through either a hard copy or as an electronic subscription. As an employer, you may receive information about specific classification entries in the Scopes manual from our office. Please feel free to contact us about this or request that we take a look at your policy to be sure your employees are classified correctly.