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Definition: Governing Class Code

The workers compensation classification that applies to the majority of the insured’s payroll other than one of the standard exception classes is considered the governing class code. It is the classification that usually identifies the type of work being performed by the insureds business. The governing class code is not necessarily the highest rated code, but the code with the most payroll (except for some exceptions shown below). You will find the governing classification will be used to properly determine how certain employees within a business are classified. Certain managers and miscellaneous employees will be classed within the governing classification. You will also find that executive officers who regularly perform duties of a manager, superintendent, foreman or worker will be included within the governing classification code.

Governing classifications, when properly applied, will represent the normal activities of any particular business operation. As an example, think of a metal goods manufacturing plant. Individual work processes found within this type of business may include:

· the processing of raw materials;

· use of metal presses for stamping metal parts;

· welding parts together;

· cleaning processing oil from completed parts;

· packaging and distribution of completed parts.

When classifying this operation, the governing classification would be metal goods manufacturing. All these individual work process would be contemplated by the governing class code.

Upon closer evaluation you may identify and question some of the individual activities conducted as being so unrelated to the primary business operation that you would naturally assume, they should be separately classed. However, these activities, known as general inclusions, may be properly included within the primary classification.

Of course, there are certain exceptions to the governing classification rule:

· general exclusion classes;

· certain operations who are classified under the multiple enterprise rule;

· those subject to the standard exception classifications;

· those subject to the interchange of labor guides.

Remember, with the exception of the construction industry, it's the business operation that is classified, not individual work processes within the business.

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