Workers' Comp, Payroll and Class Codes for a Concrete or Paving Contractor

For a concrete or paving contractor, workers' compensation is priced mostly from payroll (in some state funds, hours worked) in the class codes the insurer assigns to the work, and a final audit after the policy ends trues up the estimate. The seller's mod, which adjusts premium for claims history, usually follows the business to you under National Council on Compensation Insurance (NCCI) rules, and the standard policy expects you to report an ownership change within 90 days. State fund and independent bureau states can differ, so check yours. This guide is for the buyer who inherited crews that pave, pour, drive and grade, and wants to understand the payroll, the codes and the audit before the bill arrives.

How do class codes work for concrete and paving crews?

Workers' compensation premium is generally a state-approved rate per $100 of payroll for each class code, times the payroll in that class, with the mod then applied. The class describes the employer's business at a location or job, not each employee's duties, and the insurer assigns it. The Massachusetts bureau publishes scopes that show how finely this trade can be split. Massachusetts has its own bureau, so treat these as examples, not as the code for your business.

Office staff may fit a separate clerical class only if their duties meet the class definition. Ask whether truck drivers are included in your paving or concrete class or rated separately, because some class titles name drivers (the Massachusetts permanent asphalt class is titled "Asphalt Works and Drivers") and the manual for your state controls. Whether owners and officers are covered or excluded depends on your state and entity type, which matters if you will work in the field. Ask your insurer in writing whether you and any co-owners are included or excluded, how an owner's pay is counted if included, and what covers your own injury if you are excluded. Rules differ by state and entity type, so confirm with your broker and attorney.

Which system is my state in? Most states use NCCI. Eleven use independent bureaus, and four (North Dakota, Ohio, Washington and Wyoming) require coverage through a state fund. California, Pennsylvania and Delaware also use classification systems that differ from NCCI's. Another bureau, or NCCI in your state, may word the scopes above differently and use other codes, so never copy a code from another company. Ask your insurer which class it assigned and why, and see workers' comp class code corrections and the class code glossary entry.

How do payroll estimates and audits work for a seasonal crew?

The policy bills a deposit on estimated payroll. After the policy ends, the insurer audits actual payroll and the right classes, and you pay the difference or get a refund. Under the standard policy the insurer can audit during the policy period and for up to three years afterward, so keep payroll, time and subcontract records. Weather makes the estimate harder here, and a strong season can push payroll well past it.

Two audit rules matter for a company that does more than one kind of work. An employee's pay can be split between classes only if records show the actual time and pay in each class. Without them, one published manual puts all of that employee's pay in the highest rated class involved. And if an auditor finds the real work is not what the policy describes, the insurer can assign the right classes by endorsement. Keep job-level time records by type of work. For a buyer with debt service to cover, an audit true-up is a cash surprise, so budget for one in year one. See workers' comp payroll estimates and audit bills and pay-as-you-go workers' comp, which does not remove the audit.

What happens with subcontractors, sub-haulers and day labor?

Many concrete and paving firms use flatwork subcontractors, sub-haulers and day labor. The premium base includes pay to your own employees and to other people engaged in work that could make the insurer liable under the policy. The exception is when the subcontractor's own employer lawfully secured workers' compensation. A certificate of insurance is the usual proof, but it is evidence, not the whole test, and state law on statutory employers controls. Whether a trucker paid as an owner-operator counts as an employee varies by state, so ask your insurer and your attorney.

A hypothetical example. A flatwork contractor pays an uninsured, labor-only crew $200,000 for a set of slabs and keeps no payroll records for it. Some manuals let the auditor treat a set share of that price as payroll. In one published NCCI edition (North Carolina's) the share is 90 percent, so $180,000 could be added to the contractor's payroll and charged as if the crew were its own employees, at the contractor's mod. Other states and bureaus differ. A certificate showing the crew's employer carried its own coverage would usually have kept that payroll off the bill. See 1099 workers and the audit and whether your subcontractors carry required coverage.

Does the seller's mod follow me, and when must I report the sale?

Usually yes. Under current NCCI rules, a business that changes owners retains or transfers its experience to the acquiring, surviving or new entity. That includes buying stock or membership interests, and buying assets and taking over the operations. An asset purchase into a new company does not start you at a 1.00 mod. If you bought only the paving arm or only the flatwork arm of a larger seller, whether the experience moves depends on whether the seller's insurer can split out the data for the part you bought. Dropping the seller's experience is rare and needs a near-complete change of owners, a change in operations large enough to change the governing class, and a change in work process and hazards. The rating organization decides.

The policy calls for notice to your insurer within 90 days of an ownership change, and that applies whether or not you currently have a mod. A recalculated mod applies back to the date of the change under current NCCI rules, up or down, so late notice does not protect you from an increase. Failing to report can be treated as possible evasion of the mod. Some independent bureaus handle timing differently, so ask your broker how your state works. Businesses with more than 50 percent common ownership combine into one mod, which matters if your holding company buys add-ons. See how to review the experience mod for errors and the experience mod glossary entry.

Do the rules change in Washington, Ohio, California and Texas?

Four examples show how far the rules move. Check each with your attorney and the state agency, because they change.

• Washington. Workers' compensation comes from the state fund, which generally bases premium on hours worked rather than payroll for most risk classes, so keep hours records by type of work and confirm the basis with the Department of Labor and Industries. A buyer can become liable for the seller's unpaid premiums unless the buyer gives the Department of Labor and Industries written notice and no assessment follows within 180 days, and the statute also calls for withholding purchase price. The Washington State Department of Transportation (WSDOT) specifications also say retainage on its jobs is not released until the Department of Labor and Industries shows the contractor is current on industrial insurance premiums.
• Ohio. Workers' compensation also comes from the state fund. A successor that wholly succeeds a business generally takes its experience, subject to Ohio's own exclusion test, and the state fund can also transfer rights and obligations, including liabilities, in listed situations.
• California. A contractor holding a concrete license (C-8) cannot use the usual no-employees exemption, and a coverage lapse can lead to suspension or removal of the classification.
• Texas. Most private employers may choose not to carry workers' compensation, but a contractor on a public building or construction project must certify in writing that it covers its employees on that project, and subcontractors give the same certificate (Texas Labor Code section 406.096). Customers and lenders may require coverage on private work too.

In a state fund state the policy does not include employer's liability, so owners often add stop-gap coverage (employer's liability insurance bought separately because a state fund policy leaves it out).

What should I do this month?

1. Ask your insurer for the class codes, the estimated payroll by class, the current mod and the mod worksheet.
2. Report the ownership change in writing, and confirm how your state's bureau wants it filed.
3. Set up job-level time records by type of work, and keep subcontractor certificates on file.
4. Ask which class holds payroll for drivers, a temporary job-site plant and any permanent asphalt plant, and how time is recorded between them.
5. Ask in writing how owners and officers are treated for coverage in your state and entity type, and what covers your own injury if you are excluded.
6. Update the payroll estimate for planned hires and the season ahead.
7. Ask your attorney who bears pre-closing premium under your purchase agreement.

For the full line review, see the new owner workers' comp review. In states where Morrow is licensed, it can look at your policies and loss runs and request quotes, and any new terms depend on carrier underwriting. In Ohio and Washington, workers' compensation itself comes from the state fund.

Keep reading

• Just Bought a Concrete or Paving Contractor? What Insurance Do You Need?
• What Drives Insurance Cost for a Concrete or Paving Contractor?
• Payroll Estimates and Surprise Workers' Comp Audit Bills
• How to Check Your Experience Mod for Errors After an Acquisition
• Do 1099 Contractors Count in Your Workers' Comp Audit?
• All guides for new business owners

Frequently asked questions

What is the workers' comp class code for a concrete or paving contractor?

There is no single code. Codes vary by state and by rating bureau, and one bureau separates street paving, flatwork, commercial concrete, residential concrete and permanent asphalt plants. Your insurer assigns the class from the work you do, so ask for the classes on your policy and the reason for each.

Will I start with a clean mod if I bought the assets into a new LLC?

Usually not. Under NCCI rules the seller's experience transfers to the buyer when the buyer takes over the operations, even in an asset purchase. Excluding it takes a near-complete change of owners, a change in operations large enough to change the governing class, and a change in work process and hazards, and that is rare.

What if I miss the 90-day deadline to report the sale?

File as soon as you can. Late reporting may be treated as possible evasion of the mod, and the rating organization can correct the mod, often back to the date of the change. Ask your broker how your state handles it.

Can my crew's payroll be split between paving and flatwork?

Only with records of actual time and pay in each class. Under the manual we reviewed, estimates and percentage splits are not accepted, and without records the pay can go to the highest rated class. Rules vary by state and bureau, so ask your insurer how it wants the records kept.

References

• NCCI Experience Rating Plan Manual, Item E-1411 (Texas filing): ownership change rules
• NCCI: ABCs of Experience Rating (2025)
• NCCI Workers Compensation and Employers Liability Policy WC 00 00 00 C (carrier-hosted copy)
• North Carolina Rate Bureau: NCCI Basic Manual, Rule 2, Premium and Payroll
• American Academy of Actuaries: Influential Features in the Workers' Compensation System (October 2025)
• Massachusetts rating bureau (WCRIBMA): classification search, codes 5213, 5215, 5221, 5506, 5507, 1463
• Washington Legislature: RCW 51.16.200
• Ohio Administrative Code 4123-17-02, Successorship
• California Business and Professions Code section 7125 (mirror)
• Texas Department of Insurance: Employers (workers' compensation)
• Texas Labor Code section 406.096, required coverage for certain building or construction contractors
• Washington State DOT: Standard Specifications M 41-10 (2026), section 1-09.9

This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.