Which Employers Qualify for Assignment to Classification 8859
Which Employers Qualify for Assignment to Classification 8859
August 3, 2016
Classification 8859 applies to computer programming, software development, and web application development or website operation. Since its establishment in 1993, Classification 8859 has consistently developed the lowest advisory pure premium rate of any classification. We receive many requests for clarification regarding which employers can be assigned to these low rated classifications. There are certain limitations on what operations can be assigned to Classification 8859 when an employer also performs operations that are assignable to other classifications.
As seen below, Classification 8859(1) only applies to an employer whose product is software – either custom software that the employer develops to meet the needs of an individual client, or "generic" software that the employer develops and sells to multiple customers.
| COMPUTER PROGRAMMING OR SOFTWARE DEVELOPMENT – all employees – including Clerical Office Employees and Outside Salespersons
This classification applies to those employers that engage in the development or customization of computer programs or software for other concerns on a contract basis, as well as the development of standard ("generic") programs for use by other concerns. This classification does not apply to employers that engage in computer programming or software development in support of the employer's operations, which includes but is not limited to the development of programs for integration into a hardware product sold by the employer. |
8859(1) |
Classification 8859(1) also applies to employers who act as contractors who perform programming work for their clients. It does not apply to the programming department of an employer that incorporates the software into a product that the employer makes or sells. For example, an electronic products design or manufacturing employer may retain software programmers, but that employer does not qualify for assignment to Classification 8859(1) if the software is used in the electronic product manufactured by the employer and the software is not a stand-alone product.
Similarly, assignment to Classification 8859(2) is limited to employers that develop or operate websites for themselves or other clients, provided that the website development or operation is not in connection with any other classifiable operation performed by the employer. See phraseology below:
| INTERNET OR WEB-BASED APPLICATION DEVELOPMENT OR OPERATION – including Clerical Office Employees and Outside Salespersons
This classification applies to firms that specialize in the development and operation of Internet or web-based applications and websites. This classification also applies to employers engaged in such operations for other concerns on a contract basis. This classification does not apply to firms that operate as Internet Service Providers (ISP) or to firms that operate websites in connection with additional, separately classified operations by the same employer. |
8859(2) |
An example of when Classification 8859(2) may not be assignable is a department store that creates and manages a website to sell merchandise that the store also handles and ships. Since the department store’s operations are not solely website development, Classification 8859(2) does not apply.
In most cases, employers who are assigned to Classification 8859 are not assigned to any additional classifications. Usually, Classification 8859 is the only applicable classification for a computer programming, software development, and web application development or website operation employer as Classification 8859 specifically includes operations performed by clerical office employees or outside salespersons.
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