The four-digit code attached to your payroll may be the most expensive thing on your policy that nobody reviews.
Workers compensation · Updated September 2026
Workers compensation rates are set by classification. Each code represents a type of work with its own loss history, and the rate attached to it can differ by a factor of ten or more between a clerical code and a high-hazard construction code. Your premium is the rate for each code multiplied by the payroll assigned to it.
Codes are meant to describe the business's operations, not each employee's job title. That distinction trips up a lot of owners, because the governing classification usually covers most of the workforce regardless of individual duties.
Certain codes can be separated out when the records support it — clerical office staff, outside sales, and in some cases distinct operations conducted at separate locations. The requirement is usually that the payroll be verifiable and that the employee not also perform the higher-rated work. An office manager who spends afternoons on the shop floor generally cannot be split.
Done correctly, moving genuinely clerical payroll out of a construction code produces real savings. Done sloppily, it produces an audit adjustment and a credibility problem.
Businesses change faster than their policies. A company that once installed what it manufactured now subcontracts the installation. A restaurant adds delivery. A contractor drops the highest-risk part of its work. The code assigned three years ago keeps running until someone reviews it.
Misclassification also runs the other direction. A code that understates your operations looks cheap until a claim arises from work the code does not describe, and the carrier corrects the classification and bills the difference retroactively.
Workers compensation premium is estimated at the start of the term and trued up at audit, when the carrier reviews actual payroll and classifications. Surprises at audit are almost always the result of estimated payroll that drifted or codes that never got reviewed.
Preparing well means keeping payroll records that map cleanly to codes, keeping certificates for every subcontractor, documenting overtime separately where the rules allow it to be adjusted, and reviewing the auditor's worksheet before accepting the result.
Once a year, before renewal, walk through what your people actually do and compare it to the codes on the policy. It takes an hour and it is the most reliable way to avoid paying for risk you do not carry.
Questions about your own situation? Call 417.623.8300 or send us your current policy. We are licensed in Missouri, Kansas and Oklahoma.
Send your current policy and we will check class codes, payroll, subcontractor exposure, your experience mod and claims history before we shop it.