The Classification tab identifies each mod file's governing operation and maps it to a 3-digit NAICS code, which places the account in the right industry group for benchmarking. Mod Advisor sets this automatically, and you can override it.
Governing state
Mod Advisor totals payroll by state. The state with the most payroll is the governing state.
Governing class code
The governing class code is the payroll code that produces the highest total expected losses. Expected losses for a class code are its payroll divided by 100, multiplied by the code's expected loss rate.
In most files, this is also the code with the most payroll once the standard exception codes are set aside:
8810 Clerical Office Employees
8871 Clerical Telecommuter Employees
8742 Salespersons, Outside
7380 Drivers, Chauffeurs, Messengers
7830 Drivers, Chauffeurs and Their Helpers
NAICS mapping and description
The governing class code maps to a 3-digit NAICS code, and Mod Advisor assigns it a default description. For example, class code 4459 maps to Plastics Manufacturing. To see the full list of class codes by state and their NAICS mapping, select Classification from the left menu.
Overriding the classification
If the description or governing class code doesn't fit the account:
Open the mod file and select the Classification tab.
To change the description, click the drop-down arrow next to it and choose the one that fits.
To change the governing class code, use the governing field to choose the code that best represents the account.
Why it matters
Benchmarking reports and the Benchmarking dashboard group accounts by this NAICS code, so an incorrect classification compares the account against the wrong industry. Only mod files with the Primary file type feed benchmarking.
Here is a video.