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Standard Classifications and Assignments by Analogy

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Standard Classifications and Assignments by Analogy

December 29, 2023

One of the challenges faced by insurers, agents and brokers is determining the proper classification for a business operation when there is no classification in Part 3 of the California Workers' Compensation Uniform Statistical Reporting Plan—1995 (USRP) that specifically describes the operation. In these situations, the USRP directs that a classification is assigned by analogy. The USRP provides the following instructions at Part 3, Standard Classification System, Section III, General Classification Procedures, Rule 1, Classification Description, in pertinent part:

  1. Any business or operation specifically described by a classification shall be assigned to that classification.
  2. Any business or operation not described by a classification shall be assigned to the classification(s) most analogous from the standpoint of process and hazard...

The USRP contains over 700 classification descriptions, so the first step is to ensure that there is not an existing classification that describes the business. You may use the Classification Search tool on wcirb.com to look up a classification by typing in a keyword or classification code. If there is a classification that specifically describes the business, that classification must be assigned and assignment by analogy to another classification is not permitted.

For example, Classification 2501(1), Clothing Manufacturing, contemplates cutting and sewing of fabric to produce clothing and is often assigned by analogy to employers that cut and sew fabric to produce other non-clothing items. For this reason, Classification 2501(1) is often the first classification that comes to mind for employers engaged in any cutting and sewing operations. However, classifications such as Classification 2576, Awning, Tarp or Canvas Goods Mfg., and Classification 2571, Pillow, Quilt, Comforter or Cushion Mfg., also include cutting and sewing operations and must be assigned to the operation rather than Classification 2501(1) if they more specifically describe the employer's operations.

When there is no classification in Part 3 of the USRP that specifically describes an operation, the USRP directs that we assign the classification(s) most analogous from the standpoint of process and hazard. In other words, we are trying to find the best fit using the available classifications.

The USRP provides specific instructions for determining analogous assignments for manufacturers, stores, service providers, construction firms, and agricultural operations. Part 3, Standard Classification System, Section III, General Classification Procedures, Rule 1b of the USRP states in pertinent part:

  1. When classifying the operations of a manufacturer, consideration should be given to the industry type, finished goods, raw materials, types of tools and equipment, how employees use the materials, tools and equipment in the manufacturing process, and any other relevant factors.

    When a specific assembly classification does not exist for a certain product, the assembly of such product shall be assigned to the most analogous manufacturing classification. (See Section II, Classification Terminology, for the definitions of "Assembly or Assembling" and "Manufacturing or Mfg.")
     

  2. When classifying the operations of a store, consideration should be given to the types of products sold, who purchases the products, how the products are sold, and any other relevant factors.
     
  3. When classifying an employer that provides service(s), consideration should be given to the type(s) of service(s) provided, who contracts for the service(s), where the service(s) are provided, how employees perform the service(s), the raw materials or instrumentalities used to perform the service(s), and any other relevant factors.
     
  4. When classifying an employer that performs construction or erection operations, consideration should be given to the types of structures constructed or erected, the raw materials and types of tools and equipment used, how employees use the materials, tools and equipment, the type of contractor’s license required to perform such tasks, and any other relevant factors.
     
  5. When classifying an employer that performs agricultural operations, consideration should be given to the types of crops cultivated and animals raised, the method of cultivating and harvesting crops, the method of caring for animals, the types of machinery, tools and equipment used, how employees use the machinery, tools and equipment, and any other relevant factors.

The factors listed above help to identify the classification(s) most analogous from the standpoint of process and hazard. As previously noted, if there is a classification that specifically describes the business, that classification must be assigned, and assignment by analogy to another classification is not permitted.

More Classification Resources

Online Guide to Workers' Compensation – The Standard Classification System
California Workers' Compensation Uniform Statistical Reporting Plan—1995 
Learning Center: Classification
Classification Search

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