Cleaning & Janitorial Services Class Codes Producers Get Wrong

Common Misclassifications in Cleaning and Janitorial Services

Cleaning and janitorial services often fall into classification traps that producers overlook. These errors put the wrong rate on the policy. Understanding the nuances of how operations are described and rated is key to avoiding misclassification.

One common issue is when the business is described too broadly. For example, a company might offer both light office cleaning and deep-cleaning services for industrial facilities. If the application fails to distinguish between these operations, the class code could misrepresent the true exposure and risk profile.

Producers must also consider whether certain tasks—like handling hazardous materials or operating heavy machinery—fall under a different classification. These duties can change the exposure basis and impact the rating bureau's determination.

Payroll Mixups and Multi-Class Classifications

Another frequent issue is payroll misallocation. A cleaning service might have staff working on different types of jobs—such as office cleaning and industrial site sanitation. If all payroll is grouped into a single class without considering the differing tasks, the rate could be off.

Producers should carefully evaluate the types of work being performed and the time spent on each. If a portion of the workforce is performing duties that fall under a different classification, those should be broken out and reported accordingly. The governing rating bureau in the state where the business operates will determine how these classifications are applied.

Incidental Tasks That Change the Rating Basis

Cleaning and janitorial services sometimes involve incidental tasks that can alter the classification. For example, a business that primarily cleans offices may occasionally handle snow removal or pest control. Whether a task like that is rated under its own classification or included in the main one depends on the rating bureau's rules for that classification.

Producers need to assess whether these incidental duties are significant enough to impact the overall classification. If the tasks are frequent or involve a different type of risk profile, they should be treated as a separate classification. This helps ensure the rating bureau has an accurate picture of the business's operations and exposure.

The Governing-Class Question and Its Impact

In some cases, a business might perform multiple tasks that could fall under different classifications. When this happens, the governing-class question becomes critical. This question determines which classification will be used for rating purposes, and the state's rating bureau sets the rule for answering it.

Producers should be aware that the governing-class question is not always straightforward. Check the bureau's rule for that state before choosing the governing class. Misinterpreting this question can lead to an incorrect class being assigned, affecting the overall premium and coverage.

How to Confirm the Correct Classification

Because class codes vary by state and are determined by the governing rating bureau, producers should not assume a classification based on a single source or past experience. Instead, they should refer to the rating bureau in the relevant state to confirm the correct classification.

For example, California uses the WCIRB, while New York uses the NYCIRB. Each bureau has its own classification rules and guidelines. Producers should review the bureau's published classifications and consult with a local underwriting resource when necessary. This ensures the classification accurately reflects the business's operations and reduces the risk of misclassification.

When submitting a risk for workers' comp coverage, one submission through Cennairus reaches several carriers and specialty markets; some are connected by API and others are worked by email or a program desk. Join Cennairus to streamline your placement process and reach the carriers and specialty markets it works with.

Avoiding Common Missteps in the Submission Process

When preparing a submission for a cleaning or janitorial service, producers should avoid generalizing the business's operations. Be specific about the types of work performed, the number of employees in each role, and the time spent on each task. This level of detail helps the rating bureau assign the correct classification and ensures the business is rated accurately.

Producers should also be cautious when applying for coverage in states with independent rating systems. These states—like California and New York—have their own classification rules and may assign different codes for the same type of work. Always confirm the classification with the state's rating bureau before submitting the application.

Real-World Examples of Misclassification

Consider a business that offers both commercial cleaning and window washing. If the submission fails to separate these activities, the class code might be based on the more hazardous activity, leading to a higher premium. Similarly, a company that performs both office cleaning and industrial facility sanitation may be grouped into a single class, ignoring the different risks involved in each.

Another example is a janitorial service that occasionally handles snow removal. If the submission does not account for this, the class code may not reflect the additional risk, potentially leading to coverage issues if a claim arises from snow removal duties.

These examples highlight the importance of accurately describing the business's operations and breaking out different activities when necessary. This ensures the class code accurately reflects the business's risk profile and avoids potential misclassification.

Next Steps for Producers

To avoid misclassification in cleaning and janitorial services, producers should take the following steps:

• Review the business's operations in detail and identify any tasks that may fall under different classifications.
• Break out payroll and time spent on each activity to ensure accurate classification.
• Consult the relevant state's rating bureau to confirm the correct class code.
• Use a platform like Cennairus to streamline the submission process and access multiple carriers for efficient placement.

By taking these steps, producers can help ensure accurate classification and reduce the risk of misclassification errors. Join Cennairus to access a network of carriers and simplify the placement process for cleaning and janitorial services.