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Industry Insights

Moore: Class Code 5606: Who's the Boss?

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Over the last decade, workers' comp class code 5606 has generated so many questions from insureds.

James Moore

James Moore

Most of the questions arrive after an employer has received its premium audit statement or final premium bill for a certain policy year. The premium auditor had moved some of the workers' comp class code 5606 to a class code with a much higher rate.

When a subject appears on the workers' comp radar so many times, one has to cover it in an article. Let us look at this controversial classification code by looking at how the two largest rating bureaus (NCCI and WCIRB) define this construction industry code.

The most important part of the descriptions is included in each section. Please use the links to see the full descriptions. Both descriptions contained copyrighted information.

WCIRB version

This classification applies to executive-level supervisors of construction operations wherein the employer develops payroll in one or more construction or erection classification(s) provided not less than two levels of supervision, as defined in Section IV, Rule 2d, Executive Level Supervisors, are retained between the executive level supervisor and the workers performing actual construction operations.

NCCI version

Please remember that NCCI class code 5606 can be altered by each state.  

Code 5606 is intended to cover the project manager, construction executive, construction manager or construction superintendent of both specialty and general contracting risks. The project manager, etc., will spend some time in the office and the remainder of time visiting various job sites conferring with the job superintendent or foreperson to keep track of the progress of the work being conducted at each job or project. The qualifications established for the use of code 5606 are that the project manager, etc., of a construction or erection concern must be exercising supervision through superintendents or forepeople of the employer and cannot have direct charge over the workers at the construction or erection site. The project manager may also exercise supervision through subcontractors, superintendents or forepeople, but each subcontractor must have an on-site superintendent or foreperson at each and every job site. The important element is determining their job duties and not their title, as well as that the supervision must be indirect rather than direct.

Bottom line

The two main rating bureaus’ descriptions seem similar even though the two descriptions read somewhat differently. The best advice that I can give starts with reviewing your policy’s declarations page to see if class code 5606 covers any part of your policy’s estimated payroll. If so, keep the two above descriptions in mind. Deciding to do something after your premium audit bill arrives, other than disputing it, may not be the business strategy for your company.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

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