Ohio Admin. Code 4123-17-08
In accordance with division (A)(1) of section 4123.29 of the Revised Code, the purpose of this rule is for the bureau of workers' compensation to conform the classifications of industries according to the categories the national council on compensation insurance (NCCI) establishes that are applicable to employers in Ohio. This rule is based upon "Rule 1, Classification Assignment," effective January 1, 2002, of the classification rules of the NCCI and "Rule 2G, Interchange of Labor." The rule is used with the permission of the NCCI and is modified to conform to the requirements of the Ohio administrative code and the bureau of workers' compensation. Where the NCCI scopes of basic manual classifications contains additional rules and information relating to the reporting of payroll or classification of industries under the manual classifications, such scopes and rules shall apply under the rules of the bureau of workers' compensation, unless otherwise specifically excepted.
Classifications are divided into two types - basic classifications and standard exception classifications.
Basic classifications describe the business of an employer. This term is applied to all classifications listed in this manual, except for the standard exception classifications.
Examples of classifications that describe the business of the employer include:
Standard exception classifications describe occupations that are common to many businesses. These common occupations are not included in a basic classification unless specified in the classification working. The standard exception classifications are described as follows:
The noted classifications are assigned when all the following conditions are met: the basic classification(s) wording applicable to the business does not include clerical office, drafting or telecommuting employees; other rules do not prohibit the assignment of code 8810 or code 8871; and the employee meets the duties, site and other requirements listed as follows:
Duties must be limited to one or more of the following work activities:
This classification is assigned to employees who perform work on or in connection with a vehicle. This code includes garage employees and employees using bicycles as part of their work duties. Duties include, but are not limited to, delivering goods owned by the employer.
Code 7380 does not apply when the basic classification wording includes drivers.
This classification is assigned to employees who perform these duties away from the employer's premises.
This code excludes employees who:
Code 8742 does not apply when the basic classification wording includes outside salespersons, collectors or messengers.
This classification is assigned to employees who perform these duties on or away from the employer's premises. These employees are subject to the same rules and treatment as salespersons, collectors, or messengers - outside.
Some operations appear to be separate businesses but are included within all basic classifications. These are called general inclusions. These operations are not separately classified. They include the following:
Some employees may perform general inclusion duties for more than one basic classification. In such cases, refer to paragraph (F) of this rule for classification treatment.
Exceptions:
A general inclusion operation must be separately classified if:
Some operations in a business are so unusual for the type of business described by the applicable basic classification, that they are separately classified even though the operations are not conducted as a secondary business. These are called general exclusions. They are:
The governing classification at a specific job or location is the classification, other than a standard exception classification, that produces the greatest amount of payroll.
If a basic classification is not applicable, the governing classification is the standard exception classification that produces the greatest amount of payroll.
The governing classification is used to determine the classification treatment of:
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); and $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 (code 8810), with the greatest amount of payroll.
Principal business is described by the classification, other than a standard exception or general exclusion, with the greatest amount of payroll.
If the business is best described by a standard exception operation, and there is no basic classification other than the general inclusion or exclusion operations, then the standard exception operation that produces the greatest amount of payroll for the business is considered the principal business.
The following list provides an explanation of classification wording usage.
The "caption" is the heading that precedes the classification itself and is part of the classification wording.
The "note" is the phrase that follows the classification and is part of the classification wording.
The classification wording, including captions and notes, controls, restricts or explains the classification usage.
Example of a classification entry:
Store: fruit or vegetable - retail. No handling of fresh meats; "store" is the caption in the example and "no handling of fresh meats" is the note.
If a classification includes any of these phrases, 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.
Examples of classifications that include "all employees," "all other employees," all operations," or "all operations to completion":
Exceptions:
The following operations within the business must be classified separately even if the classification wording includes "all employees," "all other employees," "all operations," or "all operations to completion":
Clerical means clerical office employees and drafting employees as defined in paragraph (B)(2)(a) of this rule.
Clerical includes clerical telecommuters as defined in paragraph (B)(2) (a) of this rule.
Drivers means drivers, chauffeurs, and their helpers as defined in paragraph (B)(2)(b) of this rule.
If the classification wording uses the terms "includes" or "&," the operation or employees cited after those terms must not be assigned to a separate classification. This applies even though the operation or employees may be described by another classification or are at a separate location.
Examples of classification that include the terms "includes" or "&":
Note: if an insured's operations are assigned to more than one basic classification, an employee's payroll may be allocated among codes appropriate for each operation. This procedure is provided under paragraph (F) of this rule, interchange of labor.
Local manager is an employee, regardless of title, who is in direct charge of the operative procedures in the yard of a business. This employee is subject to the hazards of the business. Therefore, 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.
A classification that includes a restrictive phrase beginning with "no" or "not" must not apply to any risk that conducts any operation described in the restrictive phrase.
Examples of classifications that include the terms "no" or "not":
Exception: for mercantile, mining or construction operations, this rule applies to each job or location.
"NOC" means "not otherwise classified." If the classification wording uses the term "NOC", that classification applies only if no other classification more specifically describes the insured's business.
Examples of classification that include the term "NOC":
None of the listed codes will be assigned to a business if there is another code that more specifically and accurately applies to that business.
The terms "or" or "and" mean and/or.
Examples of classifications that include the term "or" or "and":
Salespersons means salespersons, collectors, and messengers as defined in paragraph (B)(2)(c) of this rule.
Certain classification wording refers to "stories in height." A story is defined as fifteen feet in height. It is measured from the lowest point above ground level to the highest point above ground level. Some of these classifications are:
Certain classification wording contains the phrase "to be separately rated." Operations or employees referenced in those classifications must be separately classified.
Examples of classifications that include the term "to be separately rated":
Rules regarding the assignment of more than one basic classification apply. Refer to paragraph (D)(3) of this rule.
The purpose of the classification procedure is to assign the one basic classification that best describes the business of the employer within a state. Subject to certain exceptions described in this rule, each classification includes all the various types of labor found in a business.
It is the business that is classified, not the individual employments, occupations or operations within the business.
Certain exceptions apply as noted:
Classification rules apply separately to each legal entity operating in a state even if multiple entities are insured under a single policy.
If no basic classification clearly describes the business, the classification that most closely describes the business must be assigned. All the rules pertaining to the assigned basic classification apply to this operation.
More than one basic classification may be assigned to an insured who meets conditions set forth in paragraphs (D)(3)(a) to (D)(3)(c) of this rule. Operation means activities, enterprises, processes, secondary businesses or undertakings.
Example of two operations that could qualify as two separate businesses: an insured operates bowling lanes and a movie theater. These distinct operations can qualify as two separate businesses for classification purposes because:
Examples of operations that must be separately classified because they are specifically excluded in the wording of a classification considered to be the insured's principal business:
These operations are identified by a "circle" immediately following the code number.
Each distinct type of construction or erection operation must be assigned to the class that specifically describes the operation only if separate payroll records are maintained for each operation.
If separate payroll records are not maintained for any construction or erection operation, the highest rated classification that applies to the job or location where the operation is performed must be assigned.
If a construction or erection operation is included in the scope of another classification, a separate code must not be assigned.
An insured subcontractor who performs a single type of work on a construction project or job just be classified based on the classification that describes the particular work involved.
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 code 6217 (excavation) rather than under code 6306 (sewer construction).
Exception: all operations in conjunction with concrete construction including making and erecting forms, placing reinforcing steel and stripping forms, when done by subcontractors, must be assigned to the appropriate concrete construction classification.
Uninsured subcontractors covered under the principal or general contractor's policy are classified on the basis of the classification that would apply if the work were performed by the principal's own 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 who is performing the construction of a sewer, is classified under code 6306 (sewer construction).
These operations are identified by a "square" immediately following the code number.
A farm is defined as any parcel(s) of land used for the purpose of agriculture, horticulture, viticulture, dairying, or stock or poultry raising as a business or commercial venture.
If separate payroll records are maintained, a division of payroll is allowed for each separate and distinct type of commercial farm operation.
If payroll records of the farm classification are not clear, and separate payroll records are not maintained, the entire payroll of the farm must be segregated on the basis of proportionate acreages.
Each farm classification includes:
Each farm classification excludes inside domestic workers at the farm location.
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:
These operations are identified by a "diamond" immediately following the code number.
A mercantile business is any store or dealer engaged in the sale of goods or merchandise, or in the sale of services.
For mercantile businesses, the classification is assigned separately for each location.
Store operations are classified based on the principal type of merchandise sold and whether the operations are wholesale or retail. For purposes of the rule, principal means more than fifty per cent of gross receipts, excluding receipts derived from the sale of lottery tickets.
The following definitions and instructions must be used to determine the appropriate store classification.
If a store sells a variety of goods, each of which may be subject to a different classification, the store must be assigned to the classification that best describes the merchandise that generates more than fifty per cent of the gross receipts.
Retail applies to the sale of merchandise to the general public for personal or household consumption or use and not for resale.
Wholesale applies to the sale of merchandise for resale to others; or sale to manufacturers, builders, contractors, or others for use in their business or as raw materials.
Exception: if a store's sales are clearly retail in nature, the appropriate retail store classification may be assigned regardless of the definition of retail.
Examples of store sales that are clearly retail in nature:
A store that sells merchandise on a combined wholesale and retail basis must be assigned to the appropriate store classification depending on whether the majority of gross receipts come from wholesale or retail sales.
Standard exceptions must be separately classified unless specifically included in a classification assigned to the business.
Classifications for standard exceptions apply even if the basic classification includes phrases such as "all employees" or "all operations."
Examples of classifications that include "all employees" or "all operations" but do not specifically refer to any standard exception employees:
Examples of classifications that specifically include standard exception employees:
If the principal business is described by a standard exception classification, the operations of all employees not included in the definition of standard exception classification must be assigned to the separate basic classification that most closely describes their operation.
Example of principal business that is described by a standard exception code: the insured is a public museum:
The assignment of certain classifications is limited by their notes to separate and distinct businesses because the notes may describe an operation that frequently is an integral part of a business described by another classification.
Example of assignment of a classification limited by a note:
Risks with shop operations that involve the repair of a product for which there is no repair classification are assigned to the classification that applies to the manufacture of the product, unless this 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:
Refer to paragraph (D)(5) of this rule if the governing classification is a standard exception.
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.
Some employees may perform duties directly related to more than one properly assigned classification according to paragraph (D)(3) of this rule. Their payroll may be divided among the properly assigned classifications provided that:
Note: if payroll records do not show the actual payroll applicable to each classification, the entire payroll of the individual employee must be assigned to the highest rated classification that represents any part of his or her work.
If none of the classification codes applicable to the employee has the greatest amount of payroll, the payroll for holiday, vacation sick pay, overtime and all other forms of payroll that are not directly attributable to a specific classification code must be allocated to the highest rated classification code applicable to the employee.
For the duration of the executive order, if an employer has employees work from home, the appropriate classification for the operations performed will be assigned to the employer, and a division of payroll will be allowed between two or more classifications including standard exception classifications.
Examples of division payroll allowed under an executive order:
Exceptions:
Code 8810 (clerical office employees), code 8871 (clerical telecommuter employees), code 8742 (salespersons, collectors, or messengers-outside) and code 8748 (automobile salespersons) are not available for division of payroll under this rule. However, when an interchange of labor exists between code 8810 and code 8871:
This rule does not apply to miscellaneous employees. Refer to paragraph (E) of this rule for these employees.
Examples of instances of interchange of labor where an employee's payroll may be divided between two or more classifications:
Ohio Admin. Code 4123-17-08
Promulgated Under: 111.15
Statutory Authority: 4121.12, 4121.121
Rule Amplifies: 4123.29
Prior Effective Dates: 07/27/1996, 07/01/1997, 07/01/1998, 07/01/2000, 07/01/2002, 07/01/2003, 07/12/2012