Question

The major objective of basic classification code for workers' compensations is to:

A. Group EE's activities by risk
B. Establish common exception classes
C. Identify national council states
D. Group similar business entities by common operating risk

Answer 1

The principal purpose of classification codes for workers' compensation is to sort businesses by common operating risks to ensure equitable contributions and distribution of insurance costs.The correct option is D.

Step-by-step explanation:

The major objective of basic classification codes for workers' compensation is to group similar business entities by common operating risk. This categorization helps to ensure that businesses with similar risk profiles contribute appropriately to the workers' compensation system. Workers' compensation insurance is a compulsory program wherein employers must contribute a certain percentage of their payroll into state-run funds. These funds provide financial benefits to employees who incur an injury while on the job. Grouping businesses by risk facilitates the equitable distribution of insurance costs based on the likelihood of workplace injuries.