National Council on Compensation Insurance (NCCI) manages the workers’ compensation insurance rating and classification information for most states in the U.S. This council is responsible for producing the basic manual, which sets out procedures and rules for the workers’ compensation classification system. When it comes to temporary staffing, employees assigned to client companies are classified in the same way as direct employees of the client performing similar duties. The general rule of thumb is that the employees being placed should fall under the governing classification of the client to which they are assigned, and not based on the specific duties they are performing.
NCCI provides a recommended governing classification for many businesses across the United States. The governing code reflected on NCCI’s look-up tool is the classification that generates the largest amount of payroll for that client. Assigning a classification to temporary workers being placed at the client may appear straightforward by using governing class from NCCI. However, there are specific situations and multiple reasons why the code listed on NCCI may not accurately represent the appropriate class for employees working at the client.
Standard exception codes – If you are placing an employee doing one of the job functions below, it’s possible they’d need to be separately rated. You always want to make sure the governing classification doesn’t automatically include these duties within the main phraseology.
- Clerical – 8810
- Salespersons – 8742
- Drivers – 7380
Non-NCCI states – The states listed below are not governed by NCCI and may have their own state-specific codes or specific code wording. This can make assigning a code in these states quite tricky. You will want to make sure to reference the basic manual of each state to determine if the classification wording still applies and confirm that there is not a more specific code that applies in that state.
- CA, DE, MA, MI, MN, ND, NJ, NY, NC, OH, PA, WA, WI, WY
Types of business – Certain types of business have different rules for how employees are classed:
- Construction – Each type of construction operation is assigned to the class that specifically describes that operation. The code is specific to the employee’s exact job duties.
- Farming – Each separate and distinct type of commercial farm operation is assigned to the class that specifically describes that operation.
- Mercantile – For mercantile business, classifications are assigned separately for each location. Classified based on:
- Principal type of merchandise sold.
- Whether operations are wholesale or retail.
Multiple client locations – Many businesses have multiple locations throughout the United States, some of which perform different operations from state to state. Since NCCI only reflects the state and class that generates the most payroll, it’s possible a location in a different state would have a different governing classification.
Specific phraseology wording
- State specific: Identifies state specific rules or modifications pertaining to code.
- “All employees” and “All other employees”: No other classification can be assigned unless noted in the classification wording; however, “All Employees” and “All other employees” does NOT contemplate exception codes, so all standard exception codes are still applied separately when applicable.
- “F” (Federal): Federally regulated class of business (unlike most workers’ compensation statutes and laws which are determined at the state level); appropriate coverage must be secured before placing a temp in an “F” code.
- “Includes” or “&”: Operations or employees listed after “includes” or “&” must not be assigned to another classification; standard exceptions need to be specifically listed to be included under that particular code.
- “NOC” (Not Otherwise Classified): Applies only if no other classification more specifically describes the company’s business.
- “To be separately rated”: Operations or employees referenced after “To be separately rated” must be separately classified.
If you have more questions, please contact a Marsh McLennan Agency (MMA) advisor today.
