Defined

• California uses a coding system that addresses over 500 different employment functions via codes. Using a numeric coding system, each classification gets sorted and updated by the Worker's Compensation Insurance Rating Bureau. A specific employer provides the necessary detail of each of its employees and their functions. The insurer then utilizes this information against the Bureau's codes to determine the insurance policy premium the employer must pay for coverage. While the employer can compare costs between providers, it can't go without coverage; worker's compensation coverage is required in California for a business with any number of employees, even just one.
  
  

Problems

• When an insurer, processing agency, or medical office uses the wrong code in California, it can cause delays or incorrect coverage payments to occur. This in turn can impact an employer's premium, as the coverage cost is calculated by the previous year's risks and claims.
  
  Where an employer operates in multiple states, it creates additional complications in determining premium calculations since state versus state classifications can vary. California is one of the few states that doesn't use codes from the National Council on Compensation Insurance, which means data error can occur filling out necessary forms that vary between locations.
  
  

Applying the Codes

• In companies with big labor pools, trying to figure out which California code applies to what job can be daunting. Many employers instead outsource the work to a workers' compensation auditor to come in and properly organize related classifications for reporting and coverage information.
  
  

California Classifications Available

• California has hundreds of classification codes available to choose from, and incorrect decisions can result in being charged more than necessary for insurance coverage. Very common examples include:
  
  8810(1): Clerical Office Employees
  
  5553: Roofing ---hourly wage equals or above $23.00 per hour
  
  5507: Street or Road Construction
  
  The entire list is more than 100 pages of data, and it can be screened online to make sorting easier.