WC & EL / PART ONE / RULE IV:

The object of the classification system is to group employers into classifications so that the loss cost for each reflects the exposures common to those employers.  Subject to certain exceptions described later in this Rule, it is the business of the employer within a state that is classified, not the separate employments, occupations, or operations within the business.

Classifications are divided into two types – Basic Classifications and Standard Exception Classifications.

1. Basic Classifications

   Basic classifications describe the business of an employer, such as:

   Business	Classification
   Manufacture of a Product	2883 “Furniture Mfg. NOC – Wood”
   A Process	3372 “Electroplating”
   Construction or Erection	5057 “Iron or Steel Erection NOC”
   A General Type or Character of Business	7998 “Hardware Store – Retail”
   A Service	9586 “Barber Shop”

2. Standard Exception Classifications

   Standard exception classifications describe those occupations that are common to many businesses.  Employees within the definition of a standard exception classification are not included in a basic classification unless the basic classification wording specifically includes those employees.  The standard exception classifications are defined below:

   1. “Clerical Office Employees NOC” – Code 8810 – are employees whose duties include the creation or maintenance of financial or other records of the employer, the handling of correspondence, technical drafting, telephone work which includes sales by phone, and any other related duties, provided the employee is not:
      
      
      1. regularly or frequently exposed to an operative hazard of the business;
      2. a stock or tally clerk whose work is necessary, incidental, or part of any other operation of the business other than clerical office;
      3. a cashier in a store whose duties include the handling of merchandise or is otherwise exposed to the store operations; or
      4. an executive officer, outside salesperson, or representative.

      If the employee performs any of the duties described in (i), (ii), (iii), or (iv) above, then the entire payroll of the employee is assigned to the carrier’s highest rated classification of work to which the employee is exposed.

      A clerical office is a work area separated by floors and walls and is distinguishable from all other work areas and hazards of the employer.

   2. “Telecommuter Clerical Employees” – Code 8871 are employees whose duties include the creation or maintenance of financial or other records of the employer, the handling of correspondence, technical drafting, telephone work which includes sales by phone, and any other related duties of the employer from their residence office provided the employee is not:
      
      
      1. regularly or frequently exposed to an operative hazard of the business;
      2. a stock or tally clerk whose work is necessary, incidental, or part of any other operation of the business other than clerical office;
      3. a cashier in a store whose duties include the handling of merchandise or who is otherwise exposed to the store operation; and
      4. an executive officer, outside salesperson, or representative.
         

         If the employee performs any of the duties described in (i), (ii), (iii), or (iv) above, then the entire payroll of the employee is assigned to the carrier’s highest rated classification of work to which the employee is exposed.

      A residence office is a clerical work area located in the dwelling of the clerical telecommuter employee or telecommuter drafting employee.  The dwelling of the employee must be separate and distinct form the location of the employer.

   Special Conditions

   The payroll of clerical office employees on a multiple classification risk, in which one or more classifications specifically include “clerical” and others do not, shall be assigned to the predominant classification to which their work pertains if such classification includes clerical, otherwise to Code 8810.

   If an employer conducts an operation that includes clerical, such clerical employees would be inclusive under that class.  However, if the employer also conducts another business operation, at the same or another location, that would otherwise be subject to Code 8810, then Code 8810 applies to the additional business.

   In the case of a classification which specifically includes clerical office employees, such employees shall be included under that classification regardless of whether their work is conducted at the same or a separate location.

   If a classification includes clerical office employees in its phraseology, Code 8871 “Clerical Telecommuter Employees” cannot be assigned to such employees even if such work is performed from their residence office.  The payroll of clerical telecommuter employees, on a multiple classification risk, in which one or more classifications specifically include “clerical” and others do not, shall be assigned to the predominant classification to which their work pertains if such classification includes clerical, otherwise to Code 8871.

   Clerical telecommuter employees and telecommuter drafting employees must spend more than 50 percent of their time performing clerical or drafting functions at their residence office to qualify for Code 8871.  If more than 50 percent of their time is spent performing clerical or drafting functions at the employer’s place of business, then Code 8810 would apply to the work they perform.

   1. “Drivers, Chauffeurs and Helpers NOC – Commercial” – Code 7380 are employees engaged principally (more than 50% of their time) in such duties on or in connection with a vehicle.  This classification also includes garage employees and employees using bicycles in their operations.
   2. “Salespersons, Collectors or Messengers – Outside” – Code 8742 are employees who perform these duties away from the employer’s premises.  It shall not be assigned to employees who deliver or pick up goods.  Employees who deliver merchandise by vehicle shall be classified as route salespersons or drivers.  If they walk or use public transportation, they shall be assigned to the classification to which such delivery of merchandise is incidental.
   3. “Route Salespersons and Route Supervisors” – Code 8751 are employees who cover sales routes in vehicles, including private passenger automobiles, for soliciting orders and, in addition to these sales activities, also deliver all or part of the merchandise they themselves have sold.  This classification shall also include route supervisors and incidental garage employees.  This classification does not apply to any employee who delivers merchandise which has been sold on the premises of the employer or by any other employee than the one who makes the delivery.  This classification shall not be assigned in connection with any manual classification which specifically includes salespersons or drivers.
   4. “Executive Officers – NOC – Not Foremen, Workers or Outside Salespersons” – Code 8809 This classification is applicable to executive officers of a corporation, appointed in accordance with the charter or bylaws of such corporation, whose duties are of an executive, clerical or supervisory character.  This classification shall not apply to any executive officer who regularly and frequently performs duties which are ordinarily undertaken by a foreman, worker or outside salesperson.
3. Inclusions
   
   
   1. Some operations appear to be separate businesses, but are included within the scope of classifications other than the standard exception classifications.  These operations are called general inclusions and are not separately classified unless specifically directed by classification wording. They include the following:
      
      
      1. Cafeterias, restaurants, stores, or day care centers operated by the employer for the employees’ use only.  If these operations are conducted in connection with construction, erection, lumbering or mining operations they must be separately classified.
      2. Manufacturing of containers such as bags, barrels, bottles, boxes, cans, cartons or packing cases for sole use in their own operations.
      3. Hospitals or medical facilities operated by the employer for its employees.
      4. Maintenance or repair and/or cleaning of the employer’s buildings, vehicles or equipment when performed by employees of an employer.
      5. Printing by the employer on its own products.
      6. Stevedoring and tallymen, or checking clerks.
      7. Research laboratories operated by the employer to develop, test and/or improve products manufactured by the employer.
      8. Examining and/or inspecting products manufactured by the employer (quality control).
      9. Warehousing
         
         
         1. A warehouse operated by a mercantile risk as a distributing point for merchandise which is used principally for its stores located in New York State shall be assigned to the governing classification of the stores served.
         2. A warehouse used primarily for the distributing point for merchandise to the employer’s stores located outside of New York State shall be assigned to the appropriate wholesale store classification.
      10. Tools, dies, molds or fixtures made and/or repaired by an insured that are used in the insured’s product manufacturing operations.
      11. Aircraft travel by employees, other than members of the flying crew, including employees whose payroll is assigned to the Standard Exception Classifications.
      12. Security guards protecting their employer’s premises and property.
      13. Counter personnel, cashiers, and service writers.
   2. Some employees may perform general inclusion duties for more than one basic classification. A general inclusion operation shall be separately classified only if any one of the following conditions apply:
      
      
      1. The operation is conducted as a separate and distinct business of the employer as provided in Section (E)(3) of this Rule; or
      2. The operation is specifically excluded in the classification wording; or
      3. The principal business is described by a standard exception classification.
4. Exclusions

   Some operations in a business are so unusual that they are excluded from basic classifications.  They are classified separately unless specifically included in the basic classification wording.  These operations are called general exclusions and are:

   1. Aviation – all operations of the flying and ground crews.
   2. Sawmill operations – sawing logs into lumber by equipment such as circular carriage or band carriage saws, including operations of the sawmill.
   3. New construction work including erection of permanent new buildings or additions to existing buildings.
   4. Alterations of existing buildings, including structural alterations, erection, removal of interior walls, partitions, or store fronts.
   5. Extraordinary repairs such as installation or replacement of heating, plumbing or electrical wiring systems.
   6. Installation of machinery, equipment, or fixtures in premises not previously occupied or operated by the employer.
   7. Painting in connection with any of the foregoing items.
5. Locations where all business operations are subject to standard exception classifications

   If an employer has a separate location at which the only employees engaged in business operations of the employer are subject to standard exception classifications, all other business operations being performed away from such location, the following operations, which are normally treated as general inclusions, shall be separately rated under the appropriate manual classifications describing such operations provided such operations are wholly incidental to the work performed at such location:

   1. maintenance or ordinary repair of employer’s building or equipment;
   2. restaurants; and
   3. hospitals or dispensaries.

   If any operation specified under 5(a), (b), or (c) above which is performed at such location is incidental in whole or part to any other operation of the employer, it shall be treated as a general inclusion in the usual way.

The governing classification, at a specific job or location, is the classification that produces the greatest amount of payroll, other than a standard exception classification.  In instances where no basic classification is applicable, the governing classification is the standard exception classification that produces the greatest amount of payroll.

The governing classification is determined in accordance with the Governing Classification Determination Table.

The classification wording, including the caption and note, controls, restricts, or explains the classification usage.  This wording is also referred to as the phraseology.

Words and Phrases

1. “All Employees,” “All Other Employees,” “All Operations,” or “All Operations to Completion”:  If a classification includes any of these phrases, no other classification shall be assigned unless specifically directed by the classification wording, even though some operations or employees are at a separate location.

   Exceptions to (1) above:

   1. Classifications describing an operation which is a standard exception or general exclusion shall apply.
   2. Any separate and distinct business shall be separately classified when conditions of Section (E)(3) of this Rule applies.
      
      
2. “Includes” or “&”: If a classification contains “Includes” or “&,” the operations or employees which are so designated shall not be assigned to a separate classification even though such operations or employees are described by another classification or are at a separate location.  The absence from a business of any or all the operations or employees described in the inclusion shall not render the classification inapplicable to the risk.
   
   
3. “No” or “Not”: A classification which includes a restrictive phrase beginning with “no” or “not” shall not apply to any risk which conducts any operation described in the restrictive phrase.
   
   
4. “NOC”: means “not otherwise classified.”  A classification designated “NOC” shall apply only if no other classification more specifically describes the employer’s business.
   
   
5. “Or” or “And”: The terms “or” or “and” mean and/or.    
   
   
6. “To Be Separately Rated”: If a classification requires operations or employees “to be separately rated,” all such operations or employees shall be separately classified.
   
   
7. “Story in Height”: A story is defined as 15 feet in height.  It is measured from the lowest point above ground level to the highest point above ground level.  The New York Manual contains several classifications that refer to “stories in height.”
   
   

1. Object of Classification Procedure

   The object of the classification procedure is to assign the one basic classification which best describes the business of the employer within the 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.  Classifications shall be assigned as provide below.

2. Business Not Described by a Manual Classification

   If there is no classification which describes the business, the classification which most closely describes the business shall be assigned.  Refer to Section (G)(2) of this Rule.

3. Assignment of Additional Basic Classification

   Some businesses may conduct more than one operation that may be subject to an additional classification.  The term “operation” for this Rule also means activity, enterprise, process, secondary business, or undertaking, either in singular or plural form.  More than one classification shall be assigned to an employer’s operations if conditions shown in (a), (b) or (c) below exist.

   1. The employer’s principal business is described by a basic classification that requires certain operations to be separately rated
   2. The employer is engaged in conducting one or more of the following operations:
      
      
      1. Construction or erection
      2. Farming
      3. Mercantile business
      4. Temporary labor services
      5. Professional Employment Organization (PEO)

      Refer to Section (E)(7)(10) and (11) of this Rule for conditions under which additional basic classifications may be assigned to these operations.

   3. The employer conducts more than one operation in New York State or conducts an operation(s) that is not ordinarily contemplated by the classification applicable to the employer’s principal business operations.  The principal business is the business with the greatest amount of payroll, excluding standard exception or general exclusion operations.  An additional classification may only be assigned if all the following conditions are met:

      1. Operations conducted are not inclusive under the classification wording of the principal operation.
      2. Operations conducted are not a general inclusion.  Refer to Section (B)(3)(a)(i) through (xiii) of this Rule.
      3. Assignment of the separate classification is not prohibited by the wording of the classification or any other classification assigned to the policy.
      4. Separate payroll records are maintained for each business.
      5. Each business is physically segregated, having employees who do not interchange between the operations of each business.
      6. The additional operation must be able to exist as a separate business if the employer’s principal operation ceased to exist.

      If all the above conditions do not exist:

      Any employees who interchange shall be assigned to the classification applicable to the principal business if the classification for the principal business carries a carrier approved rate which is the same or higher than that of the classification of the secondary business.

      The secondary business shall be assigned to the classification which describes that business if such classification carries a carrier approved rate higher than that applicable to the principal business.

      Policies with more than one classification may involve employees working in connection with several classifications. Payroll assignment for such employees is subject to Section (F) of this Rule.

4. Classifications Limited to Separate Businesses

   Separate and distinct business means an additional operation of the employer that is not included in the basic classification on the policy.

   The assignment of certain classifications is limited by their classification notes to separate and distinct businesses.  The notes describe an operation which is frequently an integral part of a business described by another classification.

5. Standard Exception and General Exclusion Operations

   Standard Exception and General Exclusion operations shall be separately classified unless specifically included in a classification assigned to the business.  Classifications for standard exception and general exclusion operations apply even if the basic classification includes phrases such as “all employees” or “all operations.”

6. Business Described by a Standard Exception Classification

   If the principal business is described by a standard exception classification, the operations of all employees not included in the definition of the standard exception classification shall be assigned to the basic classification which most closely describes their operations per location.

7. Construction or Erection Operations

   Each distinct type of construction or erection operation at a job or location shall be assigned to the classification which specifically describes such operation provided separate payroll records are maintained for each operation.

   Any such operation for which separate payroll records are not maintained shall be assigned to the carrier’s highest rated classification with the carrier’s highest approved rate which applies to the job or location where the operation is performed.

   A separate construction or erection classification shall not be assigned to any operation which is within the scope of another classification assigned to such job or location.

   The construction or installation of temporary facilities, such as equipment storage yards, shall be assigned to the governing classification of the job.  The construction of temporary buildings such as contractors’ offices, restaurant buildings, and bunk houses, at the site of a construction project shall be assigned to the appropriate manual classifications describing such work.  A separate classification shall not be allowed for any operation performed in a shop established in connection with a construction or erection job.  The shop operations shall be assigned to the construction or erection classification in connection with which such shop operations are performed.  If more than one classification is involved, assign the one classification carrying the greatest amount of payroll.

8. Manufacturing and/or Assembling

   The manufacturing and/or assembling of a product involves the fabrication of a finished product from raw materials and/or parts purchased from others or manufactured by the employer.  Manufacturing and assembly processes shall be assigned to the appropriate manufacturing classification of the finished product.   The subsequent assembly of products manufactured by the same employer is included under the appropriate manufacturing classification and not separately rated unless specifically directed by the classification wording.

   Employers engaged only in assembling parts that are manufactured by others, and require finishing operations such as, gluing, bolting, soldering, welding, or interlocking pieces by hand or machine, shall be assigned to the classification that would normally apply to the manufacturing of the finished product.

9. Repair Operations

   Risks having shop operations that involve the repair of products for others, for which there is no repair classification, are to be assigned to the classification that applies to the manufacture of the products, unless such repair work is specifically referred to by another classification phraseology, footnote, or definition in this Manual.

10. Mercantile Business

    A mercantile business is defined as any store or dealer engaged in the sale of purchased goods or merchandise.

    The assignment of a classification to a mercantile business is based upon the type of merchandise sold and whether the operations are wholesale or retail.

    The following definitions and instructions are to be observed in determining the appropriate mercantile classification:

    Type of Product Sold

    If a store sells several types of merchandise, each of which may be subject to a different classification, the store is to be assigned on the basis of the principal category of merchandise sold.  The term “principal” or “principally” means more than 50% of the gross receipts.

    Please note the following:

    1. If a store sells several types of merchandise, none of which are more than 50% of the gross receipts, the store classification that describes the majority of the type of merchandise sold is assigned.
    2. If a store sells several types of merchandise, each of which may be subject to a different classification, and the percentage of items sold is not kept, the store classification producing the carrier’s highest approved rate is assigned.

    Location

    Only one store or dealer classification can be applied to a single location, except for lumber yards.

    Retail v. Wholesale

    The term “retail” applies to the sale of merchandise to individual customers for their personal use only.  Sales are typically made in store-type premises where clerks assist customers in selecting displayed merchandise after which the goods are paid for and usually taken from the store by the customers themselves.  Retail sales are also made in self-service stores.  Retail sales do not include shipping and packing.

    The term “wholesale” applies to all other types of sales.

    Wholesale transactions include:

    1. Sales to others for resale.
    2. Sales of raw materials, supplies, or parts to builders, contractors, commercial or industrial firms, repair shops, institutions, schools, municipalities, or others for use in their operations.
    3. Sales made by firms that conduct sales via mail order, catalog, or the Internet provided that handling or shipping of the actual merchandise to the customer is involved and regardless of whether the sales are made on a retail or wholesale basis.  Packaging merchandise by specialist contractors shall be assigned to the appropriate wholesale store classification depending upon the principal type of merchandise being packaged.

       If no merchandise is handled or shipped by the insured from the same or from another location and the orders to involve written responses only, Code 8810 “Clerical Office Employees” shall apply.

       Sales conducted in a salesroom or showroom from samples or catalogs, where no merchandise is manufactured, handled or shipped by the insured from the same location, shall be assigned to Code 8747 “Showroom Salespersons.”

    4. The rental of general merchandise shall be assigned to the appropriate store or dealer classification as if they were sold.

    A “wholesale” classification code does not apply to manufacturers for the distribution of their own manufactured products; this activity is considered incidental to the manufacture of the product.

11. Farms

    For the purpose of the application of farm classifications, 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.

12. Recycling

    Risks engaged in collecting, sorting, handling and weighing recyclable materials, for the purpose of reselling such materials to others, shall be assigned to the appropriate second-hand dealer classification or to the appropriate store classification.

    When a risk uses recycled materials, as raw materials, to manufacture a new product, the appropriate classification that applies to the manufacturing of such product shall be assigned unless such operation is specifically designated to be assigned to another classification contained in this Manual.

13. Professional Employer Organization, Leasing Firms, Labor Contractors, and Temporary Labor Firms

    Workers assigned to clients shall be classified to the same classification as if the workers were direct employees of the client.

1. Miscellaneous Employees

   Miscellaneous employees may perform duties which are incidental to more than one basic classification.

   Miscellaneous employees include but are not limited to:

   1. General superintendents
   2. Foremen
   3. Maintenance or power plant employees
   4. Elevator operators
   5. Receiving or shipping clerks
   6. Yard employees

   The payroll of miscellaneous employees shall be assigned to the classification with the greatest amount of payroll for the group of classifications to which their work pertains.  For employees subject to payroll limitation, Rule V Section (F), limited payroll shall be used.  In the application of this Rule to construction or erection employers, the governing classification shall be determined on the basis of the job if payrolls are kept separately by job; otherwise on the basis of the entire policy period.

2. Interchange of Labor

   Some employees, who are not miscellaneous employees, may perform duties directly related to more than one classification.  When there is such an interchange of labor, the entire payroll of employees who interchange shall be assigned to the carrier’s highest rated classification, with the highest carrier rate, representing any part of their work.  In addition, the following applies:

   1. For construction, erection, stevedoring, part-time aircraft operations in connection with Code 7421 – Aircraft Operations, sawmill, logging, lumber or installation, servicing or other operations performed away from an employer’s premises, the payroll of an individual employee may be divided and allocated to more than one classification, provided the entries on the original records of the employer disclose an allocation of each employee’s payroll.  An estimated or percentage allocation of payroll is not permitted.
   2. Code 8809 Executive Officers, Code 8810 - Clerical, Code - 8871 Clerical Telecommuter Employees, Code 8742 - Outside Salespersons and Code 7380 - Drivers, Chauffeurs and Their Helpers are not available for division of payroll under this Rule.  Therefore, should an employee qualify for a division of payroll and also perform duties associated with classification Codes 8809, 8810, 8742, 8871, or 7380, the payroll will be allocated to the classification code with the greatest amount of payroll.

      If no single classification code represents the greatest amount of payroll, then the payrolls for the operations contemplated by classification Codes 8809, 8810, 8871, 8742, and 7380 shall be assigned to the carrier’s highest rated classification code representing any part of the employee’s work.

      Clerical telecommuter employees must spend more than 50 percent of their time performing clerical functions at their residence office in order to qualify for Code 8871.  If more than 50 percent of their time is spent performing clerical functions at the employer’s place of business, then Code 8810 would apply to their operations.

   3. Should any employee qualify for a division of payroll, all holiday, vacation, sick pay, overtime and all other forms of remuneration, not directly attributable to a specific classification code, shall be allocated to the classification code with the greatest amount of payroll.  If no single classification code has the greatest amount of payroll, the payroll for holiday, vacation, sick pay, overtime and all other forms of remuneration shall be allocated to the classification code with the highest carrier approved rate.

1. Business Described by a Classification

   For a business described by a classification, show the classification wording, with or without notes, show any caption which precedes several related classifications and show the code number.  Underlined, capitalized classification titles may be used instead of the entire wording.

2. Business Not Described by any Classification

   For a business not described by any classification, show wording which describes the business.  With this wording, show the code number of the classification which most closely describes the business.  Such an assignment is controlled by all the rules applicable to the assigned classification code.  

When a change in classification is warranted following a routine, random, or requested inspection, or by internal Rating Board review of an employer’s operations, the change in classification is effective for the term of insurance in effect at the time the inspection was conducted as well as for the current term of insurance, if not the same.  The Rating Board is also permitted to make a change in classification for the twelve-month period preceding the actual date of inspection if the change is warranted for such term of insurance.

Notification of the change will be given to the insurance carrier(s) that insured the employer for the term(s) of insurance that are affected by the change.  If the carrier(s) disagree with the Rating Board’s determination, the carrier(s) may request, in writing, a reevaluation of the classification assignment stating the reason(s) for their disagreement.

Note: The Rating Board will not consider a change in classification(s) for an employer that may have been improperly classified when the inquiry is received at the Rating Board later than twelve (12) months after the expiration date of the policy term in question.