Policy
Name:
|
Classification
Assignments
|
Policy #:
|
EP-03-03
|
Code/Rule
Reference
|
ORC 4123.29. OAC 4123-17-04, including Appendix; 4123-17-08.
|
Effective
Date:
|
July 1,
2019
|
Approved:
|
Winnie
Warren, Interim Chief of Employer Services
|
Origin:
|
Employer
Policy
|
Supersedes:
|
Manual
Protests policy last revised October 17, 2011.
|
History:
|
New policy
issued June 9, 2020.
|
Review
Date:
|
July 1,
2024
|
I. Policy Purpose
The
Ohio Bureau of Workers’ Compensation (BWC) is required by ORC 4123.29(A)(1) to classify occupations or industries
according to their degree of hazard, and determine the risk of different
classes, according to National Council on Compensation Insurance (NCCI)
categories that are applicable to the state of Ohio.
II. Applicability
This
policy applies to the BWC Policy Processing Department (PPD) Classification
Unit, the BWC Premium Audit Unit, private employers (PA employers) and public
employer taxing districts (PEC employers), and their authorized representatives.
III. Definitions
A.
Basic
classifications: Classifications
that describe the business of an employer.
B.
National Council
on Compensation Insurance (NCCI):
An organization that gathers data, analyzes trends, and provides objective
insurance rate and loss cost recommendations for the workers’ compensation
industry. BWC uses NCCI’s classification system, however, BWC develops its own
rates.
C.
Classification
codes: NCCI four-digit
codes used to classify businesses for workers’ compensation insurance. Also
referred to as class codes.
D.
Standard
exception classifications:
Classifications that describe occupations that are common to many businesses.
These common occupations are not included in a basic classification unless permitted
by NCCI or OAC 4123-17-08.
IV. Policy
A.
How BWC uses NCCI
classifications.
1.
As set forth in OAC 4123-17-08, the purpose of the classification
system is to group employers with similar operations into classifications so:
a.
The assigned
classification reflects the hazards common to those employers; and
b.
The base rates
charged reflect payroll and claims costs associated with those employers.
2.
BWC determines the
one basic classification that best describes the business of the employer,
unless the employer meets the conditions for more than one basic classification
pursuant to OAC 4123-17-08(D)(3).
a.
Classifications are
not assigned to separate employments, occupations, or operations within the
business.
b.
Some employers are
classified by a standard exception classification.
c.
BWC determines if
the employer qualifies for a standard exception classification.
3.
See OAC 4123-17-08
for further information about:
a.
Explanation of
classifications;
b.
Classification
wording;
c.
Classification
procedures;
d.
Payroll assignment
miscellaneous employees; and
e.
Payroll assignment
interchange of labor.
B.
Changes in
classification.
1.
BWC may change the
classification codes assigned to an employer if BWC determines the
classification codes do not accurately reflect the employer’s operations. The
change in classification may result in BWC:
a.
Adding or
inactivating classification codes or
b.
Adjusting estimated
annual payroll (exposure).
2.
BWC decides whether
to apply the revised classification codes retrospectively or prospectively by
determining:
a.
If there was BWC
error;
b.
If the employer misrepresented
the nature of its operations on the Application for Ohio Workers’ Compensation
Coverage (U-3) or in other communications with BWC; or
c.
The financial impact
the revision has on the employer.
3.
Prospective changes
in classification.
a.
BWC may apply
changes in classification to the current policy year and subsequent policy
years if the misclassification was caused by BWC error and the correct
classification code is higher rated. Examples of BWC error include, but are not
limited to, the following situations:
i.
BWC misclassified
the employer based on the employer’s U-3, which accurately described the
employer’s operations.
ii.
BWC did not conduct
a proper review when the employer requested an additional classification code,
resulting in an added classification code included in the employer’s basic
classification.
iii. The BWC premium auditor failed to
identify the misclassification, or additional exposures, and the employer’s
operations have not changed since the previous audit.
b.
Timing of
prospective changes in classification.
i.
If BWC processes the
classification change between July 1 and March 31, the class code and estimated
annual payroll (exposure) adjustment will be applied to the current policy year.
The employer will report payroll true-up using the revised class codes. See the
Payroll True-Up policy for additional information.
ii.
If BWC processes the
classification change between April 1 and June 30, the class code and estimated
annual payroll (exposure) adjustment will be applied to the subsequent policy
year beginning July 1.
4.
Retrospective
changes in classification.
BWC may apply changes in classification
retrospectively if the employer misrepresented, or did not disclose, the nature
of its operations on the U-3, or in other communications with BWC, and the
employer’s misrepresentation prevented BWC from assigning the correct higher
rated classification code.
C.
Resolution of
complaints.
1.
BWC staff determines
if the employer’s complaint is from the initial classification codes assigned
during the application process or resulting from a BWC premium audit.
a.
Complaints from the
initial application process are resolved by Classification Unit staff.
b.
Complaints from a
premium audit are resolved by Premium Audit Unit staff.
2.
Employer complaints are
processed under the General Employer Complaint Policy.
3.
BWC has not
identified any extenuating circumstances that apply to classifications.
a.
BWC will not waive
the criteria and scope of classifications set forth in OAC 4123-17-08. OAC
4123-17-08 conforms the classifications of industries according to NCCI
categories which are applicable to employers in Ohio.
b.
BWC establishes
classifications of occupations or industries in OAC 4123-17-04. The Appendix to OAC 4123-17-04 is an
index and tool for locating specific classification numbers.
4.
BWC staff evaluates
the classification code(s) assigned to an employer and determines the
appropriateness of adding, changing, or removing classification codes based on:
a.
Verifiable division
of payroll; or
b.
The results of a
premium audit.