Tree Company Workers' Comp: Class Codes, Mod, Audits

For a tree service company, workers' compensation comes down to three things: how your insurer or state rating bureau classifies each crew's work (pruning, removal, spraying, lawn), the payroll you report in each class, and the experience mod (a score based on claims history) you inherit from the seller. Class codes vary by state and rating bureau, and your insurer assigns yours, so every code below is an example to verify, not advice about your code. This guide is for the buyer who inherited the policy, the payroll records and possibly crews of 1099 climbers. The Bureau of Labor Statistics (BLS) counted 99 fatal work injuries to tree trimmers and pruners in 2024, 39 from falls, slips or trips and 39 from contact with objects and equipment.

The short answer

Class codes classify the employer's business in each state. Tree pruning, tree removal and lawn work can fall in different classes, so verify with your insurer and bureau.
Under the NCCI Basic Manual as published for North Carolina, pay for one employee can be split between classes only with records of the actual time and pay in each, and otherwise it goes to the highest-rated class. Other bureaus can differ.
An uninsured subcontractor climber can be charged to your audit and can create injury exposure. Collect certificates before work starts.
The seller's mod and claims usually follow the business, and the policy asks you to report the ownership change within 90 days.
Some states run their own rating bureaus, four require you to buy from a state fund, and Texas lets most employers opt out. Confirm yours.

How do tree crews map to class codes?

Class codes classify the employer's business in each state, not each person's job title. Class wording comes from each state's rating bureau or the National Council on Compensation Insurance (NCCI), and the insurer assigns the code. The examples below use the Massachusetts rating bureau's public class pages and a third-party class lookup. California, Pennsylvania, Delaware and other independent bureau states use classification systems of their own, so treat each code as something to check and not as your company's code. The groups show where the class question can arise. A business usually has one governing class plus any standard exception classes the rules allow, such as clerical or outside sales.

Tree service employee groups and where the class question can arise (Massachusetts examples)
Employee group	How rules usually treat them	What to check
Climbers and ground crew who prune, trim, chip and clean up	The Massachusetts bureau's class 0106 covers pruning, trimming and spraying trees from the ground, by climbing or from aerial buckets, plus removal, chipping and haul-away. Tree spraying falls in 0106 there too. A third-party lookup shows 0106 with a similar title in most states it lists	Which class your policy uses and whether it matches the work
Crews that mainly remove trees	Massachusetts class 2702 is "Logging or Tree Removal, Nonmechanized Operations" and its wording overlaps with 0106's "incidental removal of one or a few trees"	Ask the insurer in writing where removal-heavy work belongs
Lawn and mowing crews	Massachusetts class 0042 sends tree pruning by tree specialists to 0106 and lists a lower rate than tree work in Massachusetts	Payroll records that support the split
Estimators and consulting arborists	An outside salesperson class (8742) applies only if duties fit. Someone who regularly climbs or works in trees generally does not fit	How often each estimator climbs or inspects from the tree

To test your own policy, list every class code with its estimated payroll and rate, ask the insurer for the written description of each code, and ask in writing where any group with no clear home belongs: removal-heavy crews, applicators, climbing estimators, mechanics and drivers. See workers' comp class code corrections and the class code glossary entry.

Can you split lawn, snow and tree payroll between classes?

Only where the manual allows more than one class for your business, and then only with records. Under the NCCI Basic Manual as published for North Carolina, a business can have more than one basic class only in specific situations, and one employee's pay can be split between classes only if the records show the actual time and pay in each. Estimates and percentage splits are not allowed there. Oregon has a similar records rule, but other bureaus' manuals can differ. Without proper records all of that employee's pay goes into the highest-rated class involved, so a tree company that also mows lawns or clears snow cannot assume a cheaper class for those crews.

Do not move anyone to a different class to lower cost. Ask your insurer which class fits the work and keep time and pay records by class from day one. The cost drivers guide shows where this sits among the other levers.

How do payroll estimates and audits work for seasonal and storm crews?

Your premium starts as an estimate. The insurer sets it from expected payroll in each class, then finalizes it after the policy ends from actual payroll, and can audit your records during the policy and for up to three years afterward. Tree company payroll swings with the seasons and with storms, which add temporary crews, extra drivers and overtime.

Estimate honestly. A low estimate lowers the deposit and raises the audit bill.
Tell the broker about surges. New crews, a storm response or a new service line belong in a mid-term update. If crews travel for storm work, ask the insurer how payroll and coverage are handled in the other state before the trip, because states and rating bureaus differ.

For your forecast, treat the first-year premium as an estimate and carry the audit true-up in your downside case. In a stock purchase the audit after closing usually bills the company you now own, including for payroll from before closing. In an asset purchase it is usually the seller's to settle on the seller's policy. The purchase agreement decides who bears the cost, so ask your attorney. The payroll estimates and audit bills guide, pay-as-you-go plans and changing payroll providers go deeper.

What happens when a subcontractor climber has no coverage?

Hiring a one-person crew does not take you out of the picture. The policy's payroll base includes pay to "all other persons engaged in work that could make us liable," which is how an uninsured subcontractor ends up on your audit. It is a realistic gap in a business that hires climbers for peak weeks.

A hypothetical example. A tree company hires a one-person crew for a two-week removal job, labor only, for $15,000. The crew has no workers' compensation policy and the company holds no certificate. Under the Basic Manual as published for North Carolina, with no payroll records an audit may use 90 percent of a labor-only subcontract price, or $13,500, as payroll in the company's class at the company's mod. Other states and bureaus may differ. If the climber falls, the company may also face questions about its own responsibility for the injury, depending on state law. A certificate on file before the job could have changed both the audit and the conversation.

Two cautions. First, in California, licensees in the tree service classification on the licensing board's workers' compensation page must carry coverage or a certificate of self-insurance even with no employees, so a one-person crew that says it is exempt may not be. Check the board's current classification list for the tree service entry. Second, worker classification is a legal question for employment counsel. See whether your subcontractors carry the required coverage and 1099 contractors and the workers' comp audit.

Does the seller's mod follow me, and what changes by state?

Usually yes. Under NCCI rules, buying a company's stock or buying its assets and taking over its operations is a change in ownership, and the seller's experience generally transfers to the buyer. A mod recalculated because of the change applies retroactively to the date of the change, whether it rises or falls. The policy asks you to report the change within 90 days, and failure to report can be treated as evading the experience rating. Excluding the seller's experience is rare and takes a near-complete change of owners, a change in operations big enough to change the class, and a change in work process and hazards.

A trade article by an insurance professional says a mod of 1.0 is average and that frequency of claims is what hurts. Open claims count at their reserves, so ask for the claim-level detail behind the mod worksheet, along with five years of loss runs and payroll history by class code. See reviewing the experience mod for errors.

State rules vary, so ask the rating organization for your state.

Ownership change tests. California's rating bureau and New York's rating board each publish their own rules on how an ownership change is judged and when a recalculated mod takes effect. They can differ from the NCCI timing above, so ask which edition is current.
Small companies. A company may have no mod at all, because a 1.00 factor applies below a state-set premium minimum.
Independent bureaus. Eleven states use them: California, Delaware, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania and Wisconsin. Indiana, Massachusetts and North Carolina use NCCI's experience rating plan, so the NCCI ownership rules above generally apply there. The others keep their own rules.
State funds. North Dakota, Ohio, Washington and Wyoming are monopolistic, so you buy workers' comp from the state fund, usually with separate stop gap employer's liability coverage. The fund sets classes and rates, so the class examples above do not apply directly. Washington and Ohio have successor rules that can make a buyer answer for a seller's unpaid state fund amounts, so ask the fund and your attorney what notice applies before closing.
Texas. Most private employers may choose not to carry workers' comp.

What if the owner climbs, the estimators climb, or the crew is on a PEO?

Two questions are worth putting to the insurer in writing. First, does the owner or any officer climb or work in trees, and how are they treated on the policy? Owner rules vary by state, and an owner who is the top climber is a key person question too. Second, is any of the workforce on a professional employer organization (PEO), an outside payroll and human resources company that may provide the workers' comp policy?

Under NCCI rules, joining or leaving a PEO is not an ownership change for experience rating. In an asset purchase, ask the PEO and its carrier in writing whether coverage for the seller's workforce extends to your new company, because the PEO agreement and the carrier decide, and independent bureau states may differ. The PEO versus your own workers' comp guide explains the options,.

Keep reading

Frequently asked questions

What workers' comp class code does a tree service company use?

It depends on the state and rating bureau, and the insurer assigns it. In Massachusetts, class 0106 covers tree pruning, spraying and related work and class 2702 covers nonmechanized tree removal. A third-party lookup shows 0106 in many other states, but independent bureau states have their own systems. Ask your insurer.

Can I put my lawn crew in a cheaper class?

Only if your records show actual time and pay in each class and the manual allows more than one class for your business. Under the NCCI Basic Manual as published for North Carolina, estimates and percentage splits are not allowed. Other bureaus can differ, so ask your insurer which class fits the work.

Am I responsible if a subcontractor's climber is hurt on my job?

You can be, depending on the state and on whether the subcontractor carried workers' comp, and an uninsured sub's payroll can also be added to your audit. Written agreements and current certificates reduce the risk, and employment counsel can explain your state's rules.

Does buying a tree company reset the experience mod?

Usually not. Under NCCI rules the seller's experience generally transfers to you in either a stock or an asset purchase, and a recalculated mod can apply back to the date of the change. Excluding it is rare. Independent bureau states and state fund states have their own rules, so ask your rating organization. Small companies may have no mod yet.

How soon must I report that I bought the company?

The policy asks the employer to report an ownership change to the insurer within 90 days, so tell your broker early and ask which form your state's rating organization uses.

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, Payroll and Class Codes for a Tree Service Company