The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.
NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) system. It was developed jointly by the U.S., Canada, and Mexico to allow for a high level of comparability in business statistics among the North American countries.
Scope
NAICS can apply to any business establishment in North America. Each establishment will have a NAICS code based on the primary business activity.
Regulatory citations
- None (Although some OSHA regulations, such as those for Injury/Illness Recordkeeping, use NAICS to determine coverage/exemption under the standard.)
Key definitions
- Establishment: Under NAICS, an establishment is generally a single physical location where business is conducted or where services or industrial operations are performed (e.g., factory, mill, store, hotel, movie theater, mine, farm, airline terminal, sales office, warehouse, or central administrative office). An enterprise, on the other hand, may consist of one or more locations that are more than 50 percent owned by the same entity performing the same or different types of economic activities. Each establishment of that enterprise is assigned a NAICS code, based on its own primary business activity.
- NAICS code: NAICS is a 2- through 6-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry. The 5-digit NAICS code is the level at which there is comparability in code and definitions for most of the NAICS sectors across the three countries participating in NAICS (the United States, Canada, and Mexico). The 6-digit level allows for the United States, Canada, and Mexico each to have country-specific detail. A complete and valid NAICS code contains six digits.
- Primary business activity: Ideally, the primary business activity of an establishment is determined by relative share of production costs and/or capital investment. In practice, other variables, such as revenue, value of shipments, or employment, are used as proxies. The U.S. Census Bureau generally uses revenue or value of shipments to determine an establishment’s primary business activity.
Summary of requirements
While OSHA does not have a specific requirement for NAICS codes, the Agency does use the codes for various purposes. Employers should:
- Determine the NAICS code for their establishment. NAICS codes are self-assigned, meaning the employer picks the most appropriate code based on the type of activity being performed at that establishment, using the NAICS manual structure available at www.census.gov/naics. Sometimes an agency may already have a NAICS code assigned to your operations. This is likely the result of a prior submission from your company (such as in a business license filing or prior survey or document submission). If you believe a NAICS code is inaccurate, contact the agency who will be using the code.
- Ensure they are using the most precise code when filling out OSHA forms, such as injury and illness logs.
- Check periodically for changes. If your business operations change, review the NAICS structure to see if your code should be changed. Note: The NAICS manual is scheduled for review every five years, so changes to codes can be made at that point, which could impact your classification.
