Risk Classification Codes

To calculate industrial insurance premiums correctly, you must enter information about the risk classifications in which the employees work. Risk classification codes are defined by the state of Washington, and each code is associated with a specified rate. These codes are stored in UDC 00/W.

Using the Workers Compensation Insurance Revisions program (P079211), you must enter at least one record for each company and risk classification combination. The risk classification codes that you need to set up for each company are determined by the state of Washington.

Industrial Insurance premiums include an employee- and employer-paid portion. Employers must pay the employer-paid portion of the premium; however, employers can also pay the employee-paid portion of the premium for their employees.

If the organization decides to have the employee-paid portion of the premium deducted from each employee's pay, you must set up an employer and an employee record for each company and risk classification code. The employer record must have a C (Company) in the Trans. Class field, along with the employer risk classification rate in the Workers Comp Rate field. The employee record must have an E (Employee) in the Trans Class field, along with the employee risk classification rate in the Workers Comp Rate field. This table illustrates how you might enter information for risk classification code 8810 if the employee pays a portion of the premium:

Tax Auth	Co	Trans. Class	WCI Code	% H	WC Rate	WC Limit	GL Rate	GL Limit	Pay Table
48	00001	E	8810	H	.07	9999999.00	0	9999999.00	WA
48	00001	C	8810	H	.05	9999999.00	0	9999999.00	WA

If the organization pays both the employer and employee portions of the premium, you must set up only one record for each company and risk classification code combination. This record must have a C (Company) in the Trans. Class field, and the rate in the Workers Comp Rate field should be the total of the employer and employee risk classification rate. For example, if the rate for the employer portion of the premium is .07 and the rate for the employee portion is .05, you must enter .12 in the Workers Comp Rate field for this record. This table illustrates how you might enter information for risk classification code 8810 if the organization pays the entire premium:

Tax Auth	Co	Trans Class	WCI Code	% H	WC Rate	WC Limit	GL Rate	GL Limit	Pay Table
48	00001	C	8810	H	.12	9999999.00	0	9999999.00	WA

Before you can enter risk classification information, you must set up pay tables that include only the pay types that you want to include in the premium calculation. Because industrial insurance premiums are based on the number of hours that an employee actually works, you do not want to include leave pay types such as sick time, vacation time, or holiday time in the basis table.