Yes, and it is one of the most common reasons a contractor overpays for workers comp. Every employee's payroll is rated under a job category, and each category has its own price. Put an office worker or a lower-risk trade in a high-rate category and you pay that rate on every dollar of their wages until someone fixes it. Who this is for: contractors who think their workers comp bill does not match the work their people do.
The short version
- Insurers rate payroll by job category, and each category has its own rate per $100 of payroll.
- The most common mistake is office staff rated at the field rate. The second is one high rate for a mixed crew.
- You can check this yourself. Your policy has a page listing every job category, the payroll estimated for it, and the rate.
- You can ask for a review at any time. Job descriptions, a floor plan, and payroll records make the case.
- A review can also raise your bill if payroll was rated too low, so go in with accurate facts.
How does the insurer decide which job category my employees are in?
Each business gets a main job category (the class code) that describes its work as a whole, and that rate applies to everyone unless an employee fits an exception. The main exceptions for contractors are office staff and outside salespeople, who get their own much lower categories.
The insurer sets the categories from your application. If it said "roofing contractor, six employees," every dollar was rated as roofing. Nobody asked about the bookkeeper. See what a workers comp class code is.
What are the most common mistakes?
| Mistake | What it looks like | Illustrative cost on $60,000 of payroll |
|---|---|---|
| Office staff at the field rate (the office category is code 8810 in most states) | A bookkeeper who never goes to a job site is rated as a framer | $60,000 at $8.00 per $100 is $4,800. At a $0.40 office rate it is $240. |
| One category for a mixed crew | A remodeler with framers, painters, and cleanup rated entirely as framing | Painting or cleanup at the framing rate can cost two or three times what it should. |
| Wrong trade | A siding installer rated as a roofer | Roofing rates can be double or triple siding rates. |
| Estimator rated as crew | Someone who mostly works in the office but visits job sites | Site visits normally keep them at a construction rate. |
The office category is the one most often missed. To qualify in most states, the employee must do office work only, in a space walled off from the shop, yard, and job sites, and must not be exposed to the work going on around them. Rate ranges: how much workers comp costs per employee.
Can one employee's payroll be split between two categories?
For most construction categories, yes, in most states, but the rule is strict about proof. You need original payroll records kept at the time of the work, showing each employee's hours in each type of work. A guess at year end does not count. The split is an exception written for construction work: the office category and outside sales are never split under it.
Without records, the auditor puts all of that payroll in the highest rated category the employee worked in. Someone who frames part of the week and does paperwork the rest is usually rated entirely at the framing rate.
How do I check my own policy?
- Find the page that lists your categories and rates. It sits near the front of the policy and shows each job category, its payroll estimate, and its rate. Insurers call it the rating page. In North Dakota, Ohio, Washington, and Wyoming you buy from the state fund, so look at the report you file with the fund each period.
- List your people and compare. Write down every employee, their wages, and what they actually do all day. If your only category is a trade and you have office staff, ask.
- Look at last year's audit. The worksheet shows where each employee's payroll landed. See understanding your premium audit.
How do I get it corrected?
Ask your broker to have your job categories reviewed. Insurers call this a classification review, and the insurer may send an inspector. If you still disagree, the group that writes the job category rules for your state (the rating bureau) can inspect and rule on the category. In most states that is the National Council on Compensation Insurance. About a dozen states, including California, New York, New Jersey, Pennsylvania, Massachusetts, and Texas, run their own. North Dakota, Ohio, Washington, and Wyoming have no bureau: the state fund decides, and you appeal through the state agency.
A correction that lowers your premium is often applied back to the start of the current policy year. How far back depends on your state, and on whether the insurer is fixing its own error or acting on a new inspection. Some states apply an inspection result forward from the ruling date instead, so ask for the reach in writing. The workers comp overview has the basics.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A plumbing contractor in Arizona has $500,000 of payroll. $90,000 pays an office manager and a bookkeeper who work in an office with its own entrance, walled off from the shop. The policy has one category, plumbing, at an illustrative $5.00 per $100.
What went wrong: The application three years earlier said "plumbing contractor, eight employees." The insurer rated all eight as plumbers, and no audit asked who worked where.
What it cost: Illustrative math: $90,000 at $5.00 per $100 is $4,500 a year. At a $0.40 office rate it is $360. That is about $4,140 a year, three years running.
The fix: The broker sent photos of the office, both job descriptions, and payroll by employee. The office category was added and the current year was recalculated from the policy start date.
Frequently asked questions
Q: Could my employees be classified incorrectly and costing me more?
Yes, and it is common. The usual cases are office staff rated at the field rate, one high rate for a mixed crew, or the wrong trade entirely.
Q: How do I know what job category my employees are in?
Look at the page near the front of your policy that lists each category, the payroll estimated for it, and the rate. Last year's audit worksheet shows where the auditor put each employee.
Q: Can my office manager be rated as clerical if the office is inside the shop building?
Often yes, if the office is separated by walls and a door and the employee stays out of the shop and yard. If they walk through the shop or help load trucks, most states will not allow the office rate.
Q: Can a classification review raise my bill instead of lowering it?
Yes. If the inspector finds payroll rated too low, the insurer can move it to a higher category. Go in with accurate job descriptions.
Q: How far back will the insurer fix a classification mistake?
A fix that lowers your premium is often applied back to the start of the current policy year. How far back depends on your state, and on whether the insurer is correcting an error or acting on an inspection, so ask for the reach in writing.
Q: How long does a correction take?
A simple fix often takes a week or two once the insurer has your job descriptions and payroll by employee. If an inspection is needed, allow a month or more.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Checking how a contractor's payroll is classified, and getting it corrected, is one of the first things we do for a new client.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.