Class Code Errors: The Hidden Premium Leak Most Employers Never Catch
Incorrect workers' compensation class codes are the most common — and most expensive — reason employers overpay. Here's how to audit yours.
Every employee is assigned a workers' compensation classification code that determines the base rate applied to their payroll. Assign the wrong code and you may overpay by 20–50% on that portion of your premium — without knowing it.
How do class code errors happen?
- New job roles are added but never reclassified.
- Clerical staff are lumped into a governing operations code.
- Split-payroll rules are ignored when employees do more than one type of work.
- Owners and executive officers are not capped at state maximums.
How to audit your class codes
Pull your policy declarations page and your last payroll audit. For each class code, list the employees assigned to it and confirm their actual duties match the NCCI scope of that code. When in doubt, request a scope inspection from your carrier — it's free.
OptiMOD's classification review catches these leaks before your next audit and often results in mid-term premium refunds.