Engineering Firm Workers' Comp: Class Codes, Audits

At an engineering or surveying firm, workers' compensation cost turns on which class the insurer assigns to each payroll group (field crews, licensed staff, clerical staff), how well your records support any split between classes, and whether anyone on the crew is uninsured. Class codes for surveying are not settled across states, so no one code applies everywhere, and the insurer assigns the code. After a sale, the policy generally requires you to report the ownership change within 90 days, and the seller's experience mod (the rating factor that compares the firm's claims with those of similar firms) usually follows the business. This guide is for the buyer who inherited a payroll with survey crews, engineers, drafters and managers and needs to know what to check before the first audit.

The short answer

Duties fall into four groups: licensed professionals and managers, field crews, drafting and design staff, and administrative staff. Each may be rated differently.
Class codes for engineers and surveyors differ by state and by rating bureau, so ask the insurer which class it assigned and why.
Whether drafters can be rated as clerical depends on the state manual and your records. Mixed duties can push pay into the higher rated class.
Uninsured 1099 crew members and subconsultants can be added to the premium base at audit, and an audit can look back three years.
Report an ownership change within 90 days, and check how the mod and the payroll estimate were set before you accept them.

How do job duties map to workers' comp classes at an engineering or surveying firm?

Start with who does what. The insurer rates payroll by class, and the class follows the work, not the job title. The table groups the usual roles. It describes how classification generally works, so ask your broker how your insurer treats each group.

Employee groups at an engineering or surveying firm
Group	Typical duties	How classification may work	What to document
Licensed professionals and project managers	Design, review, sealing, client meetings, site visits	Often rated in the firm's main engineering or surveying class	Office time vs site time, and any field work
Field crews	Party chiefs, instrument operators, rod workers, technicians, inspectors working outdoors and along roads	Rated in the firm's main class or a survey class, depending on the state manual	Hours, pay and job sites
Drafting and design staff	Computer-aided drafting, plan production in the office	Whether drafting can be treated as clerical depends on the state manual; Massachusetts lists technical drafting as clerical, other manuals may not	Duties, location and separate payroll records
Administrative and accounting staff	Billing, payroll, reception	Often the clerical exception, if they work only in an office and records show their pay separately	Job descriptions
Business developers and drivers	Winning public agency and developer work, driving to sites	Depends on the manual: some systems have an outside sales class, others fold sales and drivers into the main class	Time spent on the road and at clients

The glossary page on workers' comp class codes explains the basics, and the workers' compensation page gives the overview.

Which class code does a surveying firm use?

Ask the insurer which class it used for the field crew and for the office staff, and why. No single code applies everywhere. Class codes and rules vary by state, and eleven states have independent rating bureaus instead of the National Council on Compensation Insurance (NCCI), including California, Delaware, Massachusetts, Michigan, New Jersey, New York, North Carolina and Pennsylvania. California, Pennsylvania and Delaware also use classification systems that differ from NCCI's. The table shows how two lookups can differ. It is not a statement of which code applies to you.

Why a code you see online may not be yours
Source	What it lists
Massachusetts rating bureau lookup	Class 8601 covers land surveying and engineering and architecture firms operating as a separate business. Office-only drafting and clerical staff go to class 8810, and class 8742 is for outside salespersons.
A third-party code crosswalk (not an official bureau)	Lists 8601 for engineering and 8602 for surveyors in several states, with other codes for California, Texas, Delaware and Pennsylvania. The Massachusetts bureau, by contrast, puts land surveying in 8601.

Because classification differs by state and bureau, treat any code you see online as a question, not an answer. Ask the insurer which class it assigned to each payroll group and ask your broker to compare that with the state manual. If you suspect a mismatch, the guide on workers' comp class code corrections explains how corrections work.

Can drafters and office staff be rated as clerical?

Sometimes, but only on the rule's terms. A few standard exception classes, mainly clerical office employees, can be used alongside the main class for employees who meet the definition. In Massachusetts, the bureau's clerical class lists technical drafting among clerical duties. In North Carolina's Basic Manual, for example, the clerical class applies only when the firm's main class does not already include clerical staff and the clerical work area is separate from operating hazards, and its list of clerical duties names correspondence, records, files, telephone work, data entry and general office work, not drafting. So whether drafting counts as clerical depends on the state manual and the wording of the firm's own class.

Licensed engineers and project managers are not clerical employees. Anyone who does any non-clerical work generally cannot be rated clerical. Whether a drafter who also visits job sites qualifies depends on the state manual, so ask the insurer in writing.

Splitting one person's pay between two classes follows a stricter rule. Pay can be split only when records show the actual time and pay in each class. Without them, all of the pay goes into the highest rated class involved.

What happens with 1099 rod workers and subconsultants at audit?

A survey firm that fills a crew with "contract" rod workers paid on 1099s can be charged for them at audit if they have no coverage of their own. The premium base includes pay to employees and also pay to other persons engaged in work that could make the insurer liable. North Carolina's rating manual shows how this can work: a contractor is responsible for benefits owed to employees of its uninsured subcontractors, must get evidence of the subcontractor's coverage, and has the payroll classified as if the workers were its own employees. When no payroll records are provided, that manual sets minimum percentages of the subcontract price, such as 90% for labor only. Other states and bureaus may differ, and whether a design firm counts as a contractor under such a rule varies. The insurer can audit records for up to three years after a policy ends, so this is an inherited exposure, not only a future one. The guides on whether your subcontractors carry required coverage and payroll estimates and audit bills explain the process, and the resource on workers' comp for 1099 contractors covers classification.

A hypothetical example. A surveying firm used four "contract" rod workers under labor-only contracts totaling $80,000 over the policy year, with no certificates of insurance and no records the insurer would accept. At the first audit after closing, in a state whose manual works like North Carolina's, the insurer applies a 90% minimum to the labor-only price and adds $72,000 to the payroll base in the survey crew's class. In a stock deal the audit usually bills the entity the buyer now owns, so the buyer's company bears it unless the purchase agreement shifts the cost. Ask deal counsel.

How is payroll estimated, and are the owner and licensed principal covered?

The premium is an estimate. The final premium is set after the policy ends from actual payroll and the correct class codes, and you pay any balance or get a refund. An estimate carried over from the seller's year can understate payroll once you add field crews. Whether owners, partners and executive officers are included or excluded from coverage and payroll, and how their pay is counted, varies by state and policy. Ask the insurer in writing how your state treats the licensed principal, especially one who also works in the field.

What does an ownership change do to the policy and the mod?

Most engineering and surveying firms are small (in 2022 about 60 percent of employer firms in each group had fewer than 5 employees), so there may be no mod to inherit. The ownership report is still required. If there is a mod, it usually follows the business: under NCCI rules a stock purchase, an asset purchase that continues the operations, a merger and a new successor entity all count as a change in ownership. Dropping the seller's experience is rare. The policy requires you to report the change within 90 days, and NCCI accepts its ownership form, its online tool or a signed letter; some states use their own route. Under current NCCI rules a recalculated mod applies back to the date of the change, up or down. Independent bureau states time it differently (New York ties it to when you report).

The rights under a workers' compensation policy cannot be transferred without the insurer's written consent, so in an asset deal you need your own policy effective at closing, and the seller's policy still gets a final audit. If the firm uses pay-as-you-go billing or a professional employer organization (PEO), see pay-as-you-go workers' comp and PEO vs your own policy. The page on reviewing the experience mod for errors shows how to check the worksheet.

Which state rules and field hazards should I plan for?

A survey crew that stakes a county road across a state line can put payroll into a second state's system, including a state fund in North Dakota, Ohio, Washington or Wyoming (monopolistic states, where coverage must come from the state fund), and the rules for each state differ. Texas lets most private employers choose not to carry workers' compensation, but clients and lenders may still require proof of coverage. Three field hazards to plan for:

Roads. Crews staking or measuring along a roadway work next to traffic, so ask how roadside crews are protected.
Overhead lines. Crews carrying long rods or poles need a rule for working near power lines. The federal construction rule bars working close enough to touch an energized line unless the worker is protected, and whether a given survey activity counts as construction work is a question for a safety consultant.
Reporting. The Occupational Safety and Health Administration (OSHA) treats these firms as partially exempt from routine injury logs, but every employer must still report a fatality within 8 hours and an in-patient hospitalization, amputation or loss of an eye within 24 hours.

Ask the seller for its incident and near-miss records and any fatality or hospitalization reports. The guide on cost drivers explains how these facts reach price, and the after you buy guide shows where workers' compensation sits in the whole program.

What should I collect before the first audit?

Payroll by employee and class for the last three years.
Time and pay records for anyone whose pay is split between classes.
Certificates of insurance for every subconsultant and 1099 crew member.
The seller's last audit and experience mod worksheet.
Confirmation that the ownership change report was filed.

Morrow can read the seller's last audit and mod worksheet against your payroll, in the states where it is licensed, and flag mismatches. Any terms depend on carrier underwriting.

Keep reading

Frequently asked questions

What workers' comp class code applies to a land surveying firm?

It depends on the state and the rating bureau. The Massachusetts bureau lists land surveying with engineering in class 8601, while a third-party crosswalk (not an official bureau) lists 8602 for surveyors in several states. The insurer assigns the code, so ask which class it used and why.

Can my drafters be rated as clerical employees?

Possibly, if the state manual allows it, they work only in a separate office and your records show their time and pay separately. A drafter who also visits job sites may not qualify, and mixed duties can put pay in the higher rated class. Ask the insurer to confirm.

Do I owe premium for 1099 survey crew members?

You can, if they have no coverage of their own. Insurers can add their pay to the premium base at audit, and some manuals, such as North Carolina's, apply minimum percentages of the contract price when records are missing. Collect certificates of insurance and keep contracts.

When do I report the ownership change?

The policy generally requires it within 90 days of the change, whether or not the firm has a mod. NCCI accepts its ownership form, its online tool or a signed letter, and some states use their own route.

Does the seller's experience mod follow me?

Usually yes, if the firm has a mod. A very small firm may not have one. A stock purchase, an asset purchase that continues the operations, and a merger all count as ownership changes. Dropping the seller's experience is rare and takes strict conditions.

References

Just bought a business? Get your insurance reviewed.

Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.

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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.

Workers' Comp for an Engineering or Surveying Firm: Payroll and Class Codes