PERMANENT RULES
LABOR AND INDUSTRIES
Date of Adoption: August 28, 1998.
Purpose: Agency proposes to revise general reporting rules, classification plan, and corresponding base insurance rate tables applicable to chapter 296-17 WAC for workers' compensation insurance as underwritten by the Department of Labor and Industries. The agency also proposes to repeal two claim process rules applicable to chapter 296-14 WAC for workers' compensation insurance.
Citation of Existing Rules Affected by this Order: Amending chapters 296-17 and 296-14 WAC.
Statutory Authority for Adoption: RCW 51.16.035.
Adopted under notice filed as WSR 98-12-079 on June 2, 1998.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 35, Amended 311, Repealed 26.
Number of Sections Adopted on the Agency's Own Initiative: New 3, Amended 7, Repealed 3.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 35, Amended 311, Repealed 26.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 35, Amended 318, Repealed 29. Effective Date of Rule: October 1, 1998.
August 28, 1998
Gary Moore
Director
OTS-2141A.3
((MANUAL OF)) GENERAL REPORTING RULES, CLASSIFICATIONS, AUDIT AND
RECORDKEEPING, RATES((,)) AND RATING SYSTEM FOR WASHINGTON
WORKERS' COMPENSATION INSURANCE
WAC 296-17-31001 through 296-17-31029 provides rules applicable to workers' compensation insurance coverage (industrial insurance) that employers in the state of Washington must provide for their workers. We refer to these rules (WACs) as sections and the complete body of information as the workers' compensation underwriting manual. The workers' compensation underwriting manual contains sections (WACs) that define or explain:
| · | Words and phrases which we use |
| · | Who the workers' compensation system applies to |
| · | How to obtain workers' compensation coverage |
| · | Why a classification system is necessary |
| · | How our classification plan is designed |
| · | How our classification approach compares to other states |
| · | How we assign classifications to your business |
| · | How we classify your business if a specific classification treatment is not referenced in our classification plan |
| · | How employers report and pay premiums to us |
| · | How we compute base rates |
| · | Audit and recordkeeping requirements |
| · | Experience rating plan |
| · | Base rate tables. |
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In developing the general reporting rules and classifications which govern Washington's workers' compensation classification plan, we have used certain words or phrases which could have several meanings. Many of these words or phrases are defined by law in the Revised Code of Washington (Title 51 RCW) and can be found in Appendix A of this manual. Some words, however, are not defined by law. To reduce the misunderstanding which can result by our use of certain words or phrases not defined in law (Title 51 RCW), we have developed definitions which will govern what these words and phrases mean for purposes of this chapter (chapter 296-17 WAC).
The following words or phrases mean:Account: A unique numerical reference that we assign to you that identifies your business or businesses and allows us to track exposure that you report to us and losses (claims) which we pay on your behalf.
Actual hours worked: A worker's composite work period during each work day, including all of the time the employee performed work, and all periods of mandatory presence at the worksite. Actual hours worked does not include nonpaid lunch periods. The following example is provided to illustrate how work hours are to be reported. If you have questions on reporting please contact our underwriting section at (360) 902-4817.
Example: A carpet installer arrives at the employer's place of business at 8:00 a.m. to pick up supplies, carpet, and the job assignment. The carpet installer arrives at the job site at 9:00 a.m. and works until 12 noon. The installer takes a half hour nonpaid lunch period and resumes working from 12:30 p.m. until 4:00 p.m. The installer then returns to the employer's premise to drop off supplies and carpet waste. The installer leaves the employer's premise at 5:30 p.m. The employer is to report nine hours of work time regardless of whether the employee is paid by the hour or by the number of yards of carpet installed.
All: When a classification contains a descriptive phrase beginning with "all" such as in "all employees," "all other employees," "all operations," or "all work to completion," it includes all operations and employments which are normally associated with the type of business covered by the classification. This condition applies even if the operations or employments are physically separated or conducted at a separate location. Operations or employments are to be classified separately when the classification wording requires it, or when the operations or employments are not incidental to, and not usually associated with, the business described by the classification.
And: When this word is contained in any rule it is to be considered the same as the phrase "and/or."
Basic classification: A grouping of businesses or industries having common or similar exposure to loss without regard to the separate employments, occupations or operations which are normally associated with the business or industry. Basic classifications describe a specific type of business operation or industry such as mechanical logging, sawmills, aircraft manufacturing, or restaurants. In most business operations some workers are exposed to very little hazard, while others are exposed to greater hazard. Since a basic classification reflects the liability (exposure to hazard) of a given business or industry, all the operations and occupations that are common to an industry are blended together and included in the classification. The rate for a basic classification represents the average of the hazards within the classification. All classifications contained in this manual are considered basic classifications with the exception of classifications 4806, 4900, 4904, 5206, 6301, 6302, 6303, 7101, and temporary help classifications 7104 through 7121. Classification descriptions contained in WAC 296-17-501 through 296-17-779, establish the intended purpose or scope of each classification. These descriptions will routinely include types of businesses, operations, processes or employments which are either included or excluded from the classification. These references are not to be considered an all inclusive listing unless the classification wording so specifies.
But not limited to: When this phrase is used in any rule in this manual it is not to be interpreted as an all inclusive list. Such a list is meant to provide examples of operations, employments, processes, equipment or types of businesses which are either included or excluded from the scope of the classification.
Excludes or excluding: When a classification contains a descriptive phrase beginning with "excludes" or "excluding" such as "excluding drivers or delivery," "excluding second hand appliance stores," or "excludes construction operations," you must report those operations in a separate classification. If a business fails to keep the records required in the auditing recordkeeping section of this manual and we discover this, we will assign all workers hours for which records were not maintained to the highest rated classification applicable to the work which was performed.
Exposure: Worker hours, worker days, licenses, material, payroll or other measurement which we use to determine the extent to which an employer's workers have been exposed to the hazards found within a particular business or industry classification.
Governing classification: Is the basic classification assigned to a business that produces the largest number of worker hours during a calendar year (twelve months). The governing classification rule applies only to situations where a business has been assigned two or more basic classifications and is used for the sole purpose of determining what classification applies to employees and covered owners who support two or more operations. The governing classification rule is not to be used to determine the basic classification of a business.
Includes or including: When a classification contains a descriptive phrase beginning with "includes" or "including" such as "including clerical office," "including meter readers," or "includes new construction or extension of lines," you must report these operations in that basic classification even though they may be specifically described by some other classification contained in this manual or may be conducted at a separate location.
Industrial insurance: Refer to the definition of "workers' compensation insurance."
N.O.C.: This abbreviation stands for not otherwise classified. Classifications are often worded in this way when there are many variations of the same general type of business and it would be nearly impossible to list all the variations. Before a classification designated with N.O.C. is used, all other related classifications must be reviewed to determine if the business or industry is specified in another classification.
Example: You operate a retail store that sells greeting cards. In our search to classify your business we come across a classification that covers retail stores N.O.C. Before our underwriter assigns this classification to your business, they would look at other retail store classifications to see if a more precise classification could be found. In our review we note several classifications such as grocery and department stores where greeting cards are sold. None of these classifications, however, specify that they include stores that exclusively sell greeting cards. Classification 6406 "Retail stores, N.O.C.," on the other hand, contains language in its description that states it includes stores that sell items such as greeting cards, table top appliances, tropical fish and birds, and quick print shops. We would assign classification 6406 "Retail stores, N.O.C." to your business.
Or: Refer to the definition of the word "and."
Policy manager: An individual who works in the underwriting section of the department of labor and industries and manages an employer's workers' compensation insurance account. A policy manager is also referred to as an underwriter.
Premium: The total amount of money owed to the department of labor and industries as calculated by multiplying the assigned classification composite rate by the total units of exposure.
Rate: The amount of premium due for each unit of exposure. All rates are composite rates per worker hour except as otherwise provided for by other rules in this manual.
Risk: All insured operations of one employer within the state of Washington.
Temporary help: The term "temporary help" means the same as temporary service contractors defined in (Title 19 RCW) and applies to any person, firm, association or corporation conducting a business which consists of employing individuals directly for the purpose of furnishing such individuals on a part-time or temporary help basis to others.
Underwriter: Refer to the definition of a "policy manager."
Work day: Any consecutive twenty-four hour period.
Work hour: Refer to the definition of "actual hours worked."
Workers' compensation insurance: The obligation imposed on an employer by the industrial insurance laws (Title 51 RCW) of the state of Washington to insure the payment of benefits prescribed by such laws.
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What is a workers' compensation insurance program? Workers' compensation insurance is a no-fault insurance program that eliminates blame to either party for workplace injuries or illnesses. The principle features include:
| · | Wage and medical benefits to employees who suffer on-the-job injuries or illnesses; and |
| · | Immunity from lawsuits for employers as a result of workplace injuries or illnesses suffered by their employees. |
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I own a business. Am I required to have workers' compensation insurance coverage for my employees? Nearly every employer doing business in the state of Washington is required to have workers' compensation insurance for their employees. Washington law (RCW 51.12.020) does exempt certain types of employment from coverage. A copy of this law can be found in Appendix A of the workers' compensation manual. If you employ only individuals who are excluded from mandatory workers' compensation insurance coverage, you are not required to have workers' compensation insurance coverage.
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How do I determine if I am an employer? Chances are that if you employ one or more individuals to work for you, you are probably an employer. RCW 51.08.070, 51.08.180 and 51.08.195 all define the employer/employee relationship. These laws present the conditions that must exist before an exception or an independent contractor status can be recognized. Copies of these laws can be found in Appendix A of the workers' compensation underwriting manual. You may call one of our offices and a representative will help you determine if you are an employer. We are listed in the government pages of your local telephone directory, or you can call our underwriting section at (360) 902-4817 for assistance.
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(1) Where can I buy workers' compensation insurance? Washington law requires that you:
| · | Purchase your workers' compensation insurance through labor and industries; or |
| · | Be certified as a self-insured employer by the self insurance section of the department of labor and industries. |
(2) Where can I get a master application?
You can get a master application from any labor and industries, employment security, department of revenue office, the department of licensing master license service, or the corporations division of the office of the secretary of state. For your convenience you can call us at (360) 902-4817 and we will mail you one.
(3) Where do I send my completed master application?
You can mail your completed master application to the department of licensing address shown on the form, or you can return it to your local labor and industries, department of revenue, or employment security district tax office. Be sure to include the appropriate fees indicated on the form.
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(1) As a business owner, can I buy workers' compensation insurance to cover myself?
Yes, as a business owner or corporate officer you can obtain workers' compensation coverage from us. We refer to this coverage as optional coverage since as the owner/corporate officer, you are not required to have this insurance. Because owner insurance coverage is optional, you must meet certain conditions and requirements which are detailed on the application for owner/corporate officer optional coverage. These requirements include:
| · | Completing an application for optional owner/corporate officer coverage; |
| · | Reporting owner/corporate officer hours in the classification assigned to your business that is applicable to the work being performed by the owner/officer; |
| · | Submitting a supplemental report which lists the name of each covered owner/corporate officer; and |
| · | Reporting four hundred eighty hours or actual hours worked each quarter for each covered owner/corporate officer and in the applicable workers' compensation classification code. |
Your coverage will become effective immediately after the filing date we receive your application unless you indicate a future date. We will not make coverage effective on the same date or a date prior to our receipt of your completed application for owner/corporate officer coverage.
(3) Where can I obtain an application for owner/corporate officer coverage?
To obtain a copy of this application, contact your local labor and industries office. We are listed in the government pages of your local directory or you can call our underwriting section at (360) 902-4817.
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(1) Will you notify me when you have opened my workers' compensation insurance account?
Yes, we will notify you when we have opened your workers' compensation insurance account.
(2) Will you contact me if you need additional information about my business?
Yes, we will contact you if we need additional information to classify your business or establish your workers' compensation insurance account.
(3) Will you provide me with instructions on how to report and pay premiums to you?
Yes, we will send you a written notice describing the classification or classifications we have assigned to your business and how to report the worker hours or other exposure of your employees to us. You will receive a rate notice which will detail information about your premium rate and what portions of the rate you may deduct from your employees wages. You should keep these notices with your business records. A copy of a rate notice can be found in Appendix B of this manual.
(4) Will you notify me if you are going to change a classification assigned to my business?
Yes, if we need to change the classifications assigned to your business, we will send you a written notice describing the new classifications and when they become effective.
(5) How do I notify my employees that they are covered by workers' compensation insurance?
We will send you a certificate of coverage and a packet of information when we open your account. The packet will include some special notices which you are required to post in areas where employees frequently gather. Areas where you might consider posting the special notices include employee break rooms, employee bulletin boards, or areas where time cards are kept. These notices will inform your employees that they are covered for workers' compensation insurance under the Washington state fund and will tell them what they must do if they suffer a workplace injury or illness. The certificate of coverage should be posted in a place visible to the public. This certificate provides confirmation that you have obtained workers' compensation insurance coverage for your employees.
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(1) Occasionally one of my Washington employees will do some work for me in another state. Do I need to buy workers' compensation insurance in the state where they are working?
In some cases, we can provide workers' compensation insurance coverage for your Washington based employees working for you on a temporary assignment in another state. We have formal written agreements with some states which detail coverage and jurisdiction issues. We refer to these formal agreements as "reciprocal agreements." If you have questions regarding temporary coverage in another state you should contact your policy manager for assistance. The name and telephone number of your policy manager can be found on your quarterly premium report or annual rate notice. For your convenience you can call us at (360) 902-4817 for assistance and we will put you in contact with your assigned policy manager.
(2) What is a reciprocal agreement?
A reciprocal agreement is a contract between the department of labor and industries acting on behalf of the state of Washington and another state. The primary purpose of the agreement is to identify which state will be responsible for paying benefits if one of your employees is injured. This also limits your insurance costs. If you employ only Washington workers you need to buy workers' compensation insurance only from us.
(3) You mentioned that there are circumstances when you can provide insurance coverage. What are the circumstances?
The actual circumstances will vary by state. In most cases we will look at:
| · | The work to be performed, |
| · | The location where the work is to be performed, |
| · | Where the employee was first hired to work, |
| · | How long the employee will be working in the other state. |
| · | Idaho |
| · | Montana |
| · | Nevada |
| · | North Dakota |
| · | Oregon |
| · | South Dakota |
| · | Wyoming. |
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How much will I pay for workers' compensation insurance? What you pay for workers' compensation insurance will vary by:
| · | The nature of the business you are conducting, |
| · | The specific classifications applicable to your business, |
| · | The unit of exposure applicable to your industry, and |
| · | Your company's experience factor. |
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(1) What is a workers' compensation classification system?
A workers' compensation classification system is an objective method of collecting money (premiums) to pay the benefits of workers injured on the job. We believe the method used to spread this cost among the employers we insure should be fair and have some relationship to their hazard and potential for loss. Classifications are the tool used to achieve a fair method of distributing the risk among employers we insure. Objective boundaries are established for each classification. These boundaries describe the types of businesses which are included in the classification, as well as the operations and employments routinely encountered. We refer to these objective boundaries as the scope of the classification. Once these boundaries have been defined, we can begin collecting information about the employers assigned to each classification. The information includes the exposure which is being covered (risk) and the losses (claims) which are related to these businesses. Next, we use this information to establish premium rates that employers in each industry will pay for their workers' compensation insurance. Our goal is to produce fair insurance rates which reflect the hazardous nature of each industry. We have tailored our classification system in Washington to reflect industries found in our state. This makes our system responsive to change and provides rate payer equity to the employers we insure. Employers engaged in more hazardous industries such as logging will pay higher insurance rates than employers engaged in less hazardous businesses such as retail store operations.
(2) Why is a classification system needed?
We need a classification system to provide fair premium rates. Washington law (RCW 51.16.035) also requires us to have a classification system.
(3) Is the classification system the same as the classification plan?
No, we refer to the body of rules (WACs) which establish the general parameters of how classifications are to be used as the "classification system." These rules speak to the requirements of workers' compensation insurance and to our general classification approach, such as classifying by nature of business, not by occupation of worker. The "classification plan" refers to all of the various classification descriptions which describe different types of business or industry. The classification system rules (general rules) will apply to all businesses unless another treatment is specifically provided for in the classification plan rules (special rules).
(4) How is our classification plan designed?
We have designed a plan which is keyed to the nature of the businesses or industries of the employers we insure. Our plan has over three hundred business or industry classifications. Each classification carries a premium rate which reflects the hazards that workers are exposed to. Descriptions of our classifications can be found in WAC 296-17-501 through 296-17-779.
(5) Is your classification approach similar to the approach used by private insurance companies?
Yes, we are required by law (RCW 51.16.035) to use the same classification (underwriting) approach used by private carriers.
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(1) How are classifications assigned to my business?
We will assign a basic classification or classifications to your business based on the nature of the business you are engaged in. We will not assign classifications to your business based on the individual operations, duties or occupations of individuals found within your business unless the basic classification assigned to your business either requires or permits a separate classification treatment for specified operations or employments. Exceptions to this approach are outlined in WAC 296-17-31017 and 296-17-31018.
(2) Does this same classification approach apply if I have several businesses?
This classification approach will apply to each separate legal entity. Each separate legal entity will be classified on its own merits.
(3) How do you decide what classification(s) to assign to my business?
To determine what classification(s) to assign to your business, we need enough information to give us a clear understanding of the precise nature of your business and the hazards your business poses to your workers. In some cases we will need to call you to obtain more detailed information about your business. Occasionally one of our field representatives may visit your business to gain a better understanding of the nature of your business. In most cases we will find a classification that specifically describes your business.
Example: You operate a company that sells baked goods to retail customers. Before we can classify your business we need to determine whether you bake the goods you are selling or simply selling goods another business has baked. Once we have determined the precise nature of your business, we will reviewall of the available classifications to find the one that best describes the entire business. If the business has baked the products they are selling, we would consider a bakery classification or maybe a restaurant classification. If your business simply sells baked goods that another business made, we may look at a retail store classification. In most cases we will find a classification that specifically describes the business we are classifying.
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(1) Does this same classification approach apply to building and construction contractors?
Yes, but it may not appear that way without further explanation. We classify contractors by phase and type of construction since it is common for each contract to vary in scope.
Example: A contractor who builds and remodels private residences may frame the structure and work on no other phases of the project. On another job the same contractor may do only the interior finish carpentry. On still another job the contractor may install a wood deck or build a garden arbor. Each of these carpentry activities is covered by a different classification code. To ensure that contractor businesses receive the same treatment as other businesses, we assign classifications according to the phases and types of construction they contract to perform. Since some contractors specialize in one area of construction, such as plumbing, roofing, insulation, or electrical services, this classification approach mirrors that of nonbuilding contractor businesses. The policy of assigning several basic classifications to contractors engaged in multiple phases of construction may seem to be in conflict with the classification approach used for nonbuilding contractor businesses, but we have simply used the multiple business classification approach.
If we have assigned multiple classifications to your construction business you should take special care in maintaining the records required in the auditing and recordkeeping section of this manual. If we discover that you have failed to keep the required records we will assign all worker hours for which the records were not maintained to the highest rated classification applicable to the work that was performed.
(2) Who does this rule apply to?
If you are a building, construction or erection contractor and we have assigned one or more of the following classifications to your business, this rule applies to you: 0101, 0102, 0103, 0104, 0105, 0107, 0108, 0201, 0202, 0210, 0212, 0214, 0217, 0219, 0301, 0302, 0303, 0306, 0307, 0403, 0502, 0504, 0506, 0507, 0508, 0509, 0510, 0511, 0512, 0513, 0514, 0516, 0517, 0518, 0519, 0521, 0524, 0526, 0527, 0528, 0529, 0530, 0531, 0532, 0533, 0534, 0601, 0602, 0603, 0607, 0608, and 0701.
(3) Can I have a single classification assigned to my business to cover a specific construction project?
Yes, to simplify recordkeeping and reporting requirements we will assign a single classification to cover an entire project.
(4) How do I request the single classification for one of my construction projects?
You should send your request to the attention of your policy manager at the address below:
Department of Labor and Industries
P.O. Box 44144
Olympia, Washington 98504-4144
(5) If I have asked for a single classification on one of my construction projects, how do you determine which classification will apply?
You must supply us with a description of the project and a break down of the total number of hours of exposure by phase of construction that you are responsible for.
Example: You notify us that your company will be responsible for all plumbing and iron erection work on a commercial building site. You have requested a single classification for this project. In your request you tell us that you estimate that it will take one thousand work hours to perform all the plumbing work and five hundred work hours to do the steel erection work.
With this information we will estimate the premiums by classification.
Example: We determine that the plumbing work is covered under classification 0306 and the steel erection work is covered under classification 0518. Assume that classification 0306 has an hourly premium rate of $1.50 and classification 0518 has an hourly premium rate of $2.55. We estimate the total premium on this job to be $2,775 (1,000 hours x $1.50 = $1,500 + 500 hours x $2.55 = $1,275).
Our next step in this process is to develop an average hourly rate for the project. We will use this information to select the single classification which will apply to this project.
Example: We will take the estimated premium ($2,775) and divide this number by the estimated hours (1,500) and arrive at an average hourly rate of $1.85.
To select the single classification that will apply to a construction project, we will compare the average hourly rate that we have computed to the rates of the classifications applicable to the project. We will select the classification whose hourly rate is the closest to the average hourly rate that we computed from the information you supplied us with.
Example: From the information you supplied, we have determined that the average hourly rate for this project is $1.85. We also know that the rate for the plumbing classification (0306) is $1.50 per hour and the rate for steel erection is $2.55 per hour. We would assign classification 0306 as the single classification applicable to this project.
(6) How will I know what classification will apply to my construction project?
We will send you a written notice which will specify the basic classification and premium rate that will apply to this project.
(7) If I have asked for a single classification to cover one of my construction projects, am I required to use the single classification which you gave me?
No, but you should call your policy manager to verify what other classifications would apply to the project. The name and phone number of your policy manager can be found on your quarterly premium report or your annual rate notice. For your convenience you can call us at (360) 902-4817 and we will put you in contact with your assigned policy manager.
(8) I am a general construction or erection contractor, I subcontract all my work and have no employees of my own. Do I have to report to the department of labor and industries?
No, since you do not have employees, you do not need to report to the department of labor and industries. You should be aware that the workers' compensation insurance laws of Washington include certain independent contractors as workers. If we determine that an independent contractor that you used qualifies as a covered worker, you will be responsible for the premium due for their work time. You can also be held responsible for premiums due to labor and industries if you subcontract with an unregistered contractor and they fail to pay premiums on behalf of their employees. It is in your best interest to make sure that your subcontractors are registered contractors by contacting us at 1-800-647-0982.
(9) Am I required to keep any special records of subcontractors that I use?
Yes, you are required to keep certain information about the subcontractors that you use. A list of these recordkeeping requirements can be found in the audit and recordkeeping section of this manual.
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(1) Does this same classification approach apply to farming or agricultural operations?
Yes, but it may not appear so without further explanation. We classify farming and agricultural operations by type of crop or livestock raised. This is done because each type of grower will use different processes and grow or raise multiple crops and livestock which have different levels of hazards. It is common for farmers and ranchers to have several basic classifications assigned to their account covering various types of crops or livestock. If you fail to keep the records required in the auditing recordkeeping section of this manual, and we discover this, we will assign all worker hours for which records were not maintained to the highest rated classification applicable to the work performed.
(2) I am involved in diversified farming and have several basic classifications assigned to my business. Can I have one classification assigned to my account to cover the different types of farming I am involved in?
Yes, your policy manager can assist you in determining the single classification that will apply to your business. The name and phone number of your policy manager can be found on your quarterly premium report or your annual rate notice. For your convenience you can call us at (360) 902-4817 and we will put you in contact with your assigned policy manager.
(3) How do you determine what single farming classification will be assigned to my business?
The approach used to assign a single classification to a farming business is much the same as we use for construction or erection contractors. To do this, we will need a break down of exposure (estimate of hours to be worked by your employees) by type of crop or livestock being cared for (classification). This information will be used to estimate the premium which would be paid using multiple classifications. The total premium is then divided by the total estimated hours to produce an average rate per hour. We will select the classification assigned to your business which carries the hourly premium rate which is the closest to the average rate that we produced from the estimated hours. Classification 4806 is not to be assigned to any grower as the single farming classification.
(4) How will I know what single farming classification you have assigned to my business?
We will send you a written notice of the basic classification that will apply to your business.
(5) If I requested a single classification for my farming operation can I change my mind and use multiple classifications?
Yes, but you will need to call your policy manager to verify the applicable classifications.
The name and phone number of your policy manager can be found on your quarterly premium report or your annual rate notice. For your convenience you can call us at (360) 902-4817 and we will put you in contact with your assigned policy manager.
(6) I am a farm labor contractor. How is my business classified?
If you are a farm labor contractor we will assign the basic classification that applies to the type of crop being grown, or livestock being cared for. If you contract to supply both machine operators and machinery on a project, all operations are to be assigned to classification 4808.
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When are certain operations like delivery drivers included in a basic classification and when are they excluded? There are certain operations, such as delivery of goods or merchandise, which are routinely found in the businesses we insure. We refer to these operations as general inclusions to a basic classification. Although these operations are sometimes covered by a specific basic classification, we will not assign separate basic classifications to a business to cover these operations unless it was, coincidentally, the nature of the employer's business. General inclusion operations are support functions or operations of a business and, as such, are usually included within the scope of each basic classification. The determination of whether or not these operations will be included within the scope of a basic classification is made when the basic classification is first developed. That is why some basic classifications will exclude certain operations and others will include them. Unless the wording of a basic classification specifically excludes any operation listed below, they are to be included. The more common general inclusion operations are:
| · | Aircraft travel by employees in connection with the business of the employer, other than members of the flying crew. |
| · | Commissaries and restaurants for the employers' employees. However, such operations, when operated in connection with construction, erection, lumbering, or mining, will be assigned classification 3905 - restaurants. |
| · | Manufacture of containers, such as bags, barrels, bottles, boxes, cans, cartons, wooden pallets, or packing cases by employees of the employers for use in the employer's operations. |
| · | Hospitals, medical facilities, or dispensaries operated by employers for their employees. |
| · | Printing, lithography, or similar operations of the employer when used exclusively for their own products or needs. |
| · | Maintenance or ordinary repair of the employer's building or equipment when performed by employees of the employer. |
| · | Pick up and delivery when performed by employees of the employer in connection with the business of the employer. |
| · | Sales of all products being manufactured by the employer. |
| · | Warehousing, handling, packing, and shipping when performed by employees of the employer in connection with the business of the employer. |
| · | Testing or analytical laboratories when operated by employees of the employer in connection with the business of the employer. |
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How do you determine what classification(s) to assign to my business if a specific reference does not exist in the classification plan? You may operate a business which is not specifically referenced in our classification plan. This can simply be the result of differences in terminology. Classifications are constantly evolving as employers adopt new technology, employ more specialized employees, modernize equipment, and employ new processes. In rare instances our classification plan will not specifically reference a type of business. When we discover a type of business or industry for which a classification does not exist, we will follow the same general classification approach that we use to classify a business when a reference does exist. However, we need to go a step further by considering the processes used and the related hazards. We call this classifying by analogy.
Example: You are the owner of a pen manufacturing business. Assume we have contacted you and learn the following:
| · | You purchase all the plastic components from another unrelated business; |
| · | Some of your pens have plastic housings and others have metal housings; |
| · | You manufacture all of the small metal components at your plant; |
| · | Your metal manufacturing consists of metal stamping, using metal lighter than nine gauge, and extrusion processes; |
| · | You also manufacture small boxes to package your pens; |
| · | You operate a printing department for printing your company's logo and pen information on the boxes; |
| · | As a special service to customers, you will deliver their pens if they are within a sixty mile radius of your plant. |
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(1) Can I have more than one basic classification assigned to my account?
Yes, we will assign other classifications to your business when the assignment of another basic classification is required or permitted by the description(s) of the employer's other classification(s).
Example: You operate a retail book store. We would assign classification 6406 to your retail book store. Assume that as a part of the book store business you have a separate lunch counter and espresso bar in one section of the book store. A review of classification 6406 reveals that lunch counters are to be reported separately in classification 3905. We would assign classification 3905 for your lunch counter and espresso bar operation. This classification (3905) would be in addition to the book store classification (6406). Remember to keep accurate records of the exposure of each employee by classification. If you do not keep accurate records we will assign the exposure of each employee to the highest rated classification applicable to the work they performed for you. A detailed explanation of payroll records you must keep can be found in WAC 296-17-35201.
(2) Are there other circumstances when I can have more than one basic classification assigned to my account?
Yes, under certain circumstances we will assign more than one basic classification to your account. These circumstances include:
| · | The employer is operating a secondary business which includes operations that we do not consider a normal part of that employer's principal business in Washington, or |
| · | The employer has multiple retail store locations. |
| · | The employer maintains separate payroll records for each business, |
| · | Different employees work in each business, |
| · | Each business is separated by structural partitions if they share a common business location, |
| · | Each business can exist independently of the other, and |
| · | The classification language of the principal business does not prohibit the assignment of the secondary classification. |
(3) What do you mean by the term "principal business?"
The principal business is represented by the basic classification assigned to an employer which produces the greatest amount of exposure. The principal business does not include standard exception or general exclusion classifications or operations.
(4) If I have more than one basic classification assigned to my business and I have employees who do work in more than one of these classifications, can I divide their hours between these classifications on my quarterly report?
Yes, you can divide the work hours of any one employee between two or more basic classifications provided the following conditions are met:
| · | The basic classification assigned to your business allows or requires a division of hours; and |
| · | You keep detailed records of the actual time spent by each employee in each classification. Use of percentages, averages or estimates is not permitted. If you do not have original time card or time book entries to support your reporting, all worker hours in question will be assigned to the highest rated classification applicable to the work being performed. |
(5) If my business is assigned a basic classification and a standard exception classification and I have an employee who works in both classifications, can I divide their exposure (hours) between the two classifications on my quarterly report?
No, you cannot divide an employee's exposure (work hours) between a basic classification and standard exception classification. An explanation of "standard exception classification" is discussed in the next section (WAC 296-17-31018(2)). If an employee performs work covered by a basic classification and a standard exception classification, all of their exposure (hours) must be reported in the basic classification applicable to your business. You cannot report the exposure (hours) of any employee in a standard exception classification if they perform duties covered by a basic classification assigned to your business. Refer to WAC 296-17-31018 for a list and explanation of the "exception classifications."
(6) I have more than one standard exception classification assigned to my business. One of my employees works in more than one of the standard exception classifications. Can I divide their exposure (hours) between two or more standard exception classifications on my quarterly report?
No, you cannot divide an employee's work hours between two standard exception classifications. You must report all exposure (work hours) in the highest rated standard exception classification applicable to the work being performed.
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(1) What are exception classifications?
In WAC 296-17-31012 we discussed our classification policy. We described the process used to classify risk and stated that we assign the basic classification or basic classifications that best describe the nature of your company's business. While this policy is modeled after the policy used by private insurance carriers and is geared to administrative ease for you, we recognize that there are some duties or operations where your employees do not share the same general workplace hazards that your other employees are exposed to. To provide for those operations that are outside the scope of a basic classification, we have created three types of exception classifications listed below:
| · | Standard exception classifications, |
| · | Special exception classifications, and |
| · | General exclusion classifications. |
Standard exception classifications cover those employments that are administrative in nature and common to many industries. Employees covered by a standard exception classification cannot be exposed to any operative hazard of the business. If the language of the basic classification assigned to your business does not include these employments, you may be able to report them separately. The standard exception classifications are:
| · | Classification 4904 (WAC 296-17-653) "clerical office employment." This classification includes clerical, administrative, and drafting employees. |
| · | Sales personnel classifications 6301 (WAC 296-17-696), 6302 (WAC 296-17-697), and 6303 (WAC 296-17-698) includes outside sales personnel and messengers. |
| · | Classification 7101 (WAC 296-17-754) applies to corporate officers who have elected optional coverage. A corporate officer as used in these rules is a person who is an officer in the corporation, such as the president, who also serves on the corporation's board of directors and owns stock in the corporation. |
| · | A work area which is physically separated by walls, partitions, or other physical barriers, from all other work areas of the employer, and |
| · | Where only clerical office work as described in this rule is performed. |
Sales personnel are defined as employees whose duties are limited to: Soliciting new customers by telephone or in person; servicing existing customer accounts; showing, selling, or explaining products or services; completing correspondence; placing orders; performing public relations duties; and estimating. Although some of sales person's duties may be performed in a clerical office, most of their work is conducted away from the employer's physical business location or in showrooms. We refer to work that takes place away from the employer's premises as "outside sales." Sales personnel whose duties include customer service activities such as, but not limited to, the delivery of product, stocking shelves, handling inventory, or otherwise merchandising products sold to retail or wholesale customers are excluded from all standard exception classifications. Sales personnel with duties such as delivery and stocking of shelves are to be reported in the basic classification applicable to the business unless the basic classification assigned to the business requires another treatment.
Messengers are defined as employees whose duties are delivering interoffice mail, making deposits, and similar duties that are exclusively for the administration of the employer's business. Classification 6303 "messengers" does not include delivering mail or packages to the employer's customer or as a service to the public. If a messenger is engaged in delivering mail or packages as a service to the public they are to be assigned to the basic classification of the business or classification 1101 as applicable.
Corporate officers duties in classification 7101 must be limited to: Clerical duties; outside sales duties as described above; administrative duties such as hiring staff, attending meetings, negotiating contracts, and performing public relations work. To qualify for this classification, a corporate officer must:
| · | Be a shareholder in the corporation, |
| · | Be elected as a corporate officer and empowered in accordance with the articles of incorporation or bylaws of the corporation, |
| · | Serve on the corporation's board of directors, |
| · | Not have any exposure to any operative hazard of the business, and |
| · | Not directly supervise employees who have any exposure to any operative hazard of the business. |
(3) What are the special exception classifications?
Special exception classifications represent operations found within an employer's business that are allowed to be reported separately when certain conditions are met. Assuming the conditions have been met, the following classifications may be used even if your basic classification includes the phrases "all operations" or "all employees."
Security guards - classification 6601 (WAC 296-17-723) will apply if the security guard:
| · | Is an employee of an employer engaged in logging or construction, |
| · | Is for the purpose of guarding the employer's logging or construction sites, |
| · | Is employed at the site only during the hours the employer is not conducting any other operations at the site, |
| · | Has no other duties during their work shift as a security guard. |
Janitors - classification 6602 (WAC 296-17-724) will apply if:
| · | The janitorial/cleaning activities being performed are limited to the employer's clerical office, |
| · | The clerical office meets the criteria described earlier in this rule, and |
| · | The employer's office employment is assigned to be reported in classification 4904. |
(4) What are the general exclusion classifications?
General exclusion classifications represent operations that are so exceptional or unusual that they are excluded from the scope of all basic classifications. If you have these operations, we will assign a separate classification to cover them. You must keep accurate records of the work hours your employees work in these classifications. If you do not keep accurate time records for each employee performing work covered by a general exclusion classification, we will assign the work hours in question to the highest rated classification applicable to those hours. The general exclusion classifications are:
| · | Aircraft operations: All operations of the flying crew. |
| · | Racing operations: All operations of the drivers and pit crews. |
| · | Diving operations: All operations of diving personnel and ship tenders who assist in diving operations. |
| · | New construction or alterations of the business premises. |
| · | Musicians and entertainers. |
Example: Assume a corporate officer performs duties which are described in classification 7101. Occasionally, the officer flies a plane to attend a meeting. You would report the flying exposure (hours) of the corporate officer in classification 6803. The remainder of the corporate officer's time would continue to be reported in classification 7101.
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What if the only classification that describes my business is a standard exception classification? How do you assign classifications to my business?
When this happens we will assign the standard exception classification that best fits your business. Any work performed by employees that is outside of the scope of the exception classification will be classified according to the type of work being performed.
Example: You operate an insurance company. Besides having office and sales employees you have a printing department where you produce office stationery, brochures, and insurance policies, and maintenance employees to clean the office. We would assign classification 4904 to your office employees, classification 6303 to your sales employees, classification 4101 for your printing operation and classification 6602 for your janitorial staff. Since classifications 4904 and 6303 are standard exceptions, they do not include printing or maintenance operations.
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I have more than one basic classification assigned to my business. I have employees such as laundry workers whose duties never change but who support several operations. Can I divide their work hours on my quarterly report?
No, if we have assigned two or more basic classifications to your business and you have employees whose duties remain the same and are performed at the same location regardless of the operation they support, you would report these workers in the classification which carries the largest number of worker hours. To arrive at the classification that carries the largest number of worker hours, you must first eliminate the hours related to the employees who support two or more operations. Whichever basic classification carries largest number of worker hours after the supporting personnel have been segregated is the classification the supporting employees are to be reported in.
Example: You operate a motel and a restaurant which are located next to each other. You have a laundry operation that cleans the linens for the restaurant as well as doing the sheets and towels for the motel. The laundry employee's duties never change regardless of whether they are doing linens or sheets. The classification of the laundry workers would depend on which classification produces the largest amount of exposure. Let us assume for this illustration that the motel has a larger exposure (hours worked) because you have reported the laundry workers in that classification. When you remove the laundry workers hours from both classifications the restaurant classification has the larger volume of exposure (hours worked). You would report the laundry workers in the restaurant classification.
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(1) What is a "unit of exposure?"
A unit of exposure is the measure which is used to help determine the premium you will pay. For most businesses the unit of exposure is the hours worked by their employees. Because not all employees are compensated based on the hours they work, we have developed reporting alternatives to make reporting to us easier.
Example: Employers in the horse racing industry pay their premiums based on a type of license their employees hold rather than the hours the employees work. Drywall contractors pay premiums based on the square footage of the materials they install rather than the hours it took their employees to install the drywall material.
In other instances, we have developed daily, weekly, or monthly assumed work hours.
Example: Commission sales employees who work primarily away from your premises, such as a real estate sales person, are to be reported on the basis of eight hours per day or forty hours per week.
(2) What are the alternatives to actual hours worked?
The exceptions are:
| · | Apartment house managers, caretakers, or similar employees: To determine the number of hours you need to report to us, divide an employee's total compensation, including housing and utility allowances, by the average hourly wage for the classification. The total number of work hours to be reported for each employee is not to exceed 520 hours per quarter. You will need to call us at (360) 902-4817 to obtain average hourly wage information. |
| · | Baseball, basketball, and soccer teams - including players, coaches, trainers, and officials: Report each individual at 40 hours per week for each week in which they have duties. |
| · | Commission personnel - outside (such as, but not limited to, real estate and insurance sales): For each day they have duties, report each individual at eight hours per day for part-time employees and forty hours per week for full-time employees. |
| · | Drywall - stocking, installation, scrapping, taping, and texturing: Premiums are based on material installed/finished rather than the hours it took to install/finish the drywall. |
| · | Horse racing - excluding jockeys: Premiums are paid on a license basis and collected by the Washington horse racing commission at the time of licensing. |
| · | Jockeys: Report ten hours for each race/mount or for any day in which duties are reported. |
| · | Race car drivers: Report ten hours for each race/heat. |
| · | Salaried personnel: All salaried employees of an employer must be reported by the same method. You must report either the actual hours worked for each employee or one hundred sixty hours per month. You cannot report some salaried workers based on the actual hours they work and others using the one hundred sixty hours per month method. |
No, if you employ piece workers you must report the actual hours these individuals work for you unless another unit of exposure is required.
Example: If you have employees engaged in drywall work you would report and pay premiums on the basis of the square footage of the material they installed not the hours they worked.
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How do I report exception classification employees on my quarterly report? If the language of the basic classification assigned to your business does not include those occupations, operations or employments which we have defined by exception classifications and treatments, you may report them separately in the applicable exception classification. To report these employments, operations and occupations separately, you must meet all of the conditions specified in the exception classification rules which are applicable to the classification.
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How often will I need to report and pay premiums? Most employers will report and pay premiums once every three months. We refer to these three-month periods as quarters. For example, the months of January, February, and March represent the first quarter of a calendar year. In some cases employers report at more frequent intervals.
Example: Reforestation contractors report on a contract basis for any project over ten thousand dollars. Since contracts may last only a few days, reforestation contractors may file reports daily, weekly, and monthly.
If you do not have employees during a quarter, you must return your premium report by the due date and indicate "no payroll" or "no employees" across the face of the report. If you do not submit reports when required, we will estimate premiums and initiate legal action against you to collect premiums due.
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(1) How do you determine what rate to charge me?
Each classification has a corresponding base rate. The base rate assigned to your business will depend on the basic classification or classifications assigned to your business.
(2) What do you mean by a base rate?
The base rate is a comparison of losses (claims) and exposure to produce a cost per unit of exposure. The base rate is an unmodified rate that all employers with an experience factor of 1.000 will pay in a specific classification.
(3) Do all employers in the same classification pay the base rate?
In practice, only a few employers pay the base rate. If you are a new employer, you will pay the base rate until you have reported worker hours during the current experience period. After you have reported hours during an experience period, your rate will be modified as of January 1, of the next calendar year. We refer to that modified rate as your experience rate. Your experience rate is the base rate adjusted by your own company's claims losses (experience factor). It can produce a premium higher or lower than the base rate. This means that employers with few claims will pay less than employers in the same classification who have many claims. Experience rating encourages strong safety and accident prevention programs. Details of how experience rating affects your premium are outlined in WAC 296-17-850 through 296-17-875. Your policy manager can also answer questions about your individual experience factor. The name and phone number of your policy manager can be found on your quarterly premium report or your annual rate notice. For your convenience you can call us at (360) 902-4817 and we will put you in contact with your assigned policy manager.
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If I change the type of business I operate, or add a new operation, should I call you? Yes, we rely on you to update us about changes in your business operations. We provide a place on your quarterly premium reports to let us know about any changes you have made. If you need help determining if changes to your account are necessary, you can call your policy manager. Depending on the type of change you are making, you may need to complete a new master application. The name and phone number of your policy manager can be found on your quarterly premium report or annual rate notice. For your convenience you can call us at (360) 902-4817 and we will put you in contact with your assigned policy manager.
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If I have more than one business, can I report them on the same account? The way the businesses are organized will make a difference. Each separate "ownership type" must be classified and reported separately from any other much the same way you must keep each business' financial records separate from any other. Your master application must specify the "ownership type" of your business, such as, sole proprietor, partnership, corporation, etc. If that one ownership type registration is for more than one location of the same business or more than one type of business, you can choose to report all of them on the same account or on separate accounts. However, if you register each as a separate ownership type, you must report them on separate accounts.
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Sometimes I use temporary help employees which I obtain through a temporary help company. Do I have to report those workers to labor and industries in my basic classification? No, if you obtain temporary help employees from a temporary help company, the temporary help company should report these workers to us and pay the required premiums. Temporary help companies have special classifications assigned to them to report and pay premiums on behalf of their client businesses. These classifications are used only in the temporary help industry and are different from our basic classifications which are assigned to nontemporary help companies. If the temporary help service fails to pay premiums to us, the client company is held responsible for the unpaid premiums of any temporary help employee used by the client company.
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What are my responsibilities when I close my business, or when I no longer have employees? You must notify us in writing when you close your business or when you no longer have employees. You may either send a letter, or include a note on your final quarterly report. We will not close your account from a telephone call.
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(1) What insurance principles does the department of labor and industries use when a new classification is developed?
Those principles are broken down into four major components as follows:
| · | Administration |
| · | Equity |
| · | Homogeneity |
| · | Safety |
(2) What are these principles?
| · | Administration: Recordkeeping requirements must be simple and easy to follow. If our classification system imposed burdensome recordkeeping requirements, most employers would find it difficult to comply. Resolving complaints related to burdensome recordkeeping requirements would be in nobody's interest. The premium rate for your basic classification is based on the average exposure to hazard of all your workers. If our classification system were based upon individual occupations, you would pay a lower rate for your workers whose duties are considered low hazard, but you would pay a higher rate for your workers who have duties that expose them to a greater hazard. The total premium you pay would not be decreased; it would only be redistributed and would require more recordkeeping. Having one basic classification assigned to cover all the operations makes recordkeeping and reporting easier for you. |
| · | Statistical credibility or equity: By monitoring our classification plan, we ensure that enough hours are reported in each classification to provide a meaningful statistical base. A large enough statistical base helps avoid sudden large increases or decreases in rates and keeps them at the lowest possible level. We refer to this as statistical credibility. Classifications must also be responsive to change if equity and fairness are to be achieved. Our classification plan is in a constant state of evolution. In the early 1970s we had approximately 45 classifications. Today we have over 300 main classifications and approximately 1,000 subclassification codes to track losses. In some industries, the evolution is gradual, and no change to the classification itself is needed. We recognize that the wording used to describe a classification may not have kept up with changes in an industry. However, as the industry conditions evolve because of modern equipment, new processes or materials, or changes in employment laws and safety standards, so does the experience upon which the rate is based. In other words, the changes in the experience which is used to develop premium rates reflect new developments in processes, equipment, and technology even though the wording in the classification is unchanged. We strive to keep our classification language current. Although it would be easy to just change the classification wording as we encounter changes in an industry, Washington law requires that we conduct public hearings before we make official changes to the rule. We do this as a public safeguard and to involve business in the change process. As technologies change or new industries develop, we receive requests from industry representatives for new classifications or for determination of proper classification assignments for the new processes. We will evaluate the request and determine if there is a large enough group of employers to justify a new classification. Any classification must produce enough premium to cover losses. In addition, as specific industries become obsolete or certain processes are no longer in use we will discontinue the classifications that covered them. |
| · | Homogeneity: Although it is rare that any two businesses are identical, our classification plan recognizes that similar businesses have similar exposures to occupational injury and disease. Employers with similar operations and exposures are grouped together so each classification includes common exposures and carries a rate that reflects those exposures. This method of grouping homogenous risks ensures that the overall cost of the workers' compensation system is distributed fairly among the businesses we insure. Classifications must also be mutually exclusive. Our classifications are clearly defined so that each type of business or industry fits in only one basic classification. |
| · | Workplace safety and accident prevention: By classifying employers by the nature of their business, each industry can take responsibility for controlling its own workers' compensation costs. Employers may belong to a trade association, which usually offers safety or risk management services. If such services result in fewer and less costly accidents, that improved experience will tend to lower the base rates for that industry. If our classification system were based upon the occupations or duties of employees, the success of a single industry's safety or risk management program would have little impact on its premium costs. |
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For the purpose of interpretation of this manual, chapter 296-17 WAC, or administering Title 51 RCW, the following terms shall have the meanings given below:
(1) "Free from control or direction" shall mean that the contracted individual has the responsibility to deliver a finished product or service without the contracting firm or individual either exercising direct supervision over the work hours or the methods and details of performance or having the right to exercise that authority under the contract.
(2) "Principle place of business" shall be the physical location of the business from which the contract of service is directed and controlled.
(3) "Within a reasonable period" for establishing an account with state agencies shall be the time prior to the first date on which the individual begins performance of service toward the contract or the date upon which the individual is required to establish an account with a state agency, as otherwise required by law, whichever event shall last occur.
(4) "Bona fide officer" means any person empowered in good faith by stockholders or directors, in accordance with articles of incorporation or bylaws, to discharge the duties of such officer.
(5) "Related by blood within the third degree" means the degree of kinship as computed according to the rules of the civil law.
(6) "Related by marriage" means the union subject to legal recognition under the domestic relations laws of this state.
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(1) Professional and semiprofessional athletic teams. Athletes assigned to a Washington-domiciled sports team are mandatorily covered by Washington industrial insurance: Provided, That a professional athlete who is under contract with a parent team domiciled outside of the state of Washington while assigned to a team domiciled within Washington is subject to mandatory coverage by Washington industrial insurance unless the player and employer (parent team) have agreed in writing as to which state shall provide coverage in accordance with RCW 51.12.120(5).
The following rules shall apply to the written agreement:
(a) Agreement must be in writing and signed by the employer and the individual athlete.
(b) Agreement must specify the state that is to provide coverage. The state agreed upon to provide coverage must be a state in which the player's team, during the course of the season, will engage in an athletic event. For example, if the Washington-based team is a part of a league with teams in only Washington, Oregon, and Idaho, the player and the employer can agree to any of those three states to provide coverage. However, they could not agree to have California provide the coverage as this would not qualify as a state in which the player regularly performs assigned duties.
(c) The state agreed upon accepts responsibility for providing coverage and acknowledges such to the department by certified mail.
(d) Agreement and certification by the other state must be received by this department's underwriting section prior to any injury incurred by the athlete.
(e) Agreement will be for one season only commencing with the assigning of the player to a particular team. A separate agreement and certification must be on file for each additional season.
Failure to meet all of these requirements will result in the athlete being considered a Washington worker for premium and benefit purposes until such time as all requirements have been met.
Professional sports teams who are domiciled outside the state of Washington and who participate in sporting events with Washington-domiciled teams are not subject to Washington industrial insurance for their team members while in this state. These out-of-state teams are not considered employers subject to Title 51 on the basis that they are not conducting a business within this state.
(2) Excluded employments. Any employer having any person in their employ excluded from industrial insurance whose application for coverage under the elective adoption provisions of RCW 51.12.110 or authority of RCW 51.12.095 or 51.32.030 has been accepted by the director shall report and pay premium on the actual hours worked for each such person who is paid on an hourly, salaried-part time, percentage of profit or piece basis; or one hundred sixty hours per month for any such person paid on a salary basis employed full time. In the event records disclosing actual hours worked are not maintained by the employer for any person paid on an hourly, salaried-part time, percentage of profits or piece basis the worker hours of such person shall be determined by dividing the gross wages of such person by the state minimum wage for the purpose of premium calculation. However, when applying the state minimum wage the maximum number of hours assessed for a month will be one hundred sixty.
(3) Special trucking industry rules. The following subsection shall apply to all trucking industry employers as applicable.
(a) Insurance liability. Every trucking industry employer operating as an intrastate carrier or a combined intrastate and interstate carrier must insure their workers' compensation insurance liability through the Washington state fund or be self-insured with the state of Washington.
Washington employers operating exclusively in interstate or foreign commerce or any combination of interstate and foreign commerce must insure their workers' compensation insurance liability for their Washington employees with the Washington state fund, be self-insured with the state of Washington, or provide workers' compensation insurance for their Washington employees under the laws of another state when such other state law provides for such coverage.
Interstate or foreign commerce trucking employers who insure their workers' compensation insurance liability under the laws of another state must provide the department with copies of their current policy and applicable endorsements upon request.
Employers who elect to insure their workers' compensation insurance liability under the laws of another state and who fail to provide updated policy information when requested to do so will be declared an unregistered employer and subject to all the penalties contained in Title 51 RCW.
(b) Reporting. Trucking industry employers insuring their workers' compensation insurance liability with the Washington state fund shall keep and preserve all original time records/books including supporting information from drivers' logs for a period of three calendar years plus three months.
Employers are to report actual hours worked, including time spent loading and unloading trucks, for each driver in their employ. For purposes of this section, actual hours worked does not include time spent during lunch or rest periods or overnight lodging.
Failure of employers to keep accurate records of actual hours worked by their employees will result in the department estimating work hours by dividing gross payroll wages by the state minimum wage for each worker for whom records were not kept. However, in no case will the estimated or actual hours to be reported exceed five hundred twenty hours per calendar quarter for each worker.
(c) Exclusions. Trucking industry employers meeting all of the following conditions are exempted from mandatory coverage.
(i) Must be engaged exclusively in interstate or foreign commerce.
(ii) Must have elected to cover their Washington workers on a voluntary basis under the Washington state fund and must have elected such coverage in writing on forms provided by the department.
(iii) After having elected coverage, withdrew such coverage in writing to the department on or before January 2, 1987.
If all the conditions set forth in (i), (ii), and (iii) of this subsection have not been met, employers must insure their workers' compensation insurance liability with the Washington state fund or under the laws of another state.
(d) Definitions. For purposes of interpretation of RCW 51.12.095(1) and administration of this section, the following terms shall have the meanings given below:
(i) "Agents" means individuals hired to perform services for the interstate or foreign commerce carrier that are intended to be carried out by the individual and not contracted out to others but does not include owner operators as defined in RCW 51.12.095(1).
(ii) "Contacts" means locations at which freight, merchandise, or goods are picked up or dropped off within the boundaries of this state.
(iii) "Doing business" means having any terminals, agents or contacts within the boundaries of this state.
(iv) "Employees" means the same as the term "worker" as contained in RCW 51.08.180.
(v) "Terminals" means a physical location wherein the business activities (operations) of the trucking company are conducted on a routine basis. Terminals will generally include loading or shipping docks, warehouse space, dispatch offices and may also include administrative offices.
(vi) "Washington" shall be used to limit the scope of the term "employees." When used with the term "employees" it will require the following test for benefit purposes (all conditions must be met).
| · | The individual must be hired in Washington or must have been transferred to Washington; and |
| · | The individual must perform some work in Washington (i.e., driving, loading, or unloading trucks). |
Failure to produce these required records within thirty days of the request, or within an agreed upon time period, shall constitute noncompliance of this rule and RCW 51.48.030 and 51.48.040. Employers whose premium computations are made by the department in accordance with (d) of this subsection are barred from questioning, in an appeal before the board of industrial insurance appeals or the courts, the correctness of any assessment by the department on any period for which such records have not been kept, preserved, or produced for inspection as provided by law.
(a) General definitions. For purpose of interpretation of this section, the following terms shall have the meanings given below:
(i) "Actual hours worked" means each workers' composite work period beginning with the starting time of day that the employees' work day commenced, and includes the entire work period, excluding any nonpaid lunch period, and ending with the quitting time each day work was performed by the employee.
(ii) "Work day" shall mean any consecutive twenty-four-hour period.
(b) Employment records. Every employer shall with respect to each worker, make, keep, and preserve original records containing all of the following information for three full calendar years following the calendar year in which the employment occurred:
(i) The name of each worker;
(ii) The Social Security number of each worker;
(iii) The beginning date of employment for each worker and, if applicable, the separation date of employment for each such worker;
(iv) The basis upon which wages are paid to each worker;
(v) The number of units earned or produced for each worker paid on a piece-work basis;
(vi) The risk classification(s) applicable to each worker;
(vii) The number of actual hours worked by each worker, unless another basis of computing hours worked is prescribed in WAC 296-17-31021. For purposes of chapter 296-17 WAC, this record must clearly show, by work day, the time of day the employee commenced work, and the time of day work ended;
(viii) A summary time record for each worker showing the calendar day or days of the week work was performed and the actual number of hours worked each work day;
(ix) In the event a single worker's time is divided between two or more risk classifications, the summary contained in (b)(viii) of this subsection shall be further broken down to show the actual hours worked in each risk classification for the worker;
(x) The workers' total gross pay period earnings;
(xi) The specific sums withheld from the earnings of each worker, and the purpose of each sum withheld;
(xii) The net pay earned by each such worker.
(c) Business, financial records, and record retention. Every employer is required to keep and preserve all original time records completed by their employees for a three-year period. The three-year period is specified in WAC 296-17-352 as the composite period from the date any such premium became due.
Employers who pay their workers by check are required to keep and preserve a record of all check registers and cancelled checks; and employers who pay their workers by cash are required to keep and preserve records of these cash transactions which provide a detailed record of wages paid to each worker.
(d) Recordkeeping - estimated premium computation. Any employer required by this section to make, keep, and preserve records containing the information as specified in (b) and (c) of this subsection, who fails to make, keep, and preserve such records, shall have premiums calculated as follows:
(i) Estimated worker hours shall be computed by dividing the gross wages of each worker for whom records were not maintained and preserved, by the state's minimum wage, in effect at the time the wages were paid or would have been paid. However, the maximum number of hours to be assessed under this provision will not exceed five hundred twenty hours for each worker, per quarter for the first audited period. Estimated worker hours computed on all subsequent audits of the same employer that disclose a continued failure to make, keep, or preserve the required payroll and employment records shall be subject to a maximum of seven hundred eighty hours for each worker, per quarter.
(ii) In the event an employer also has failed to make, keep, and preserve the records containing payroll information and wages paid to each worker, estimated average wages for each worker for whom a payroll and wage record was not maintained will be determined as follows: The employer's total gross income for the audit period (earned, received, or anticipated) shall be reduced by thirty-five percent to arrive at "total estimated wages." Total estimated wages will then be divided by the number of employees for whom a record of actual hours worked was not made, kept, or preserved to arrive at an "estimated average wage" per worker. Estimated hours for each worker will then be computed by dividing the estimated average wage by the state's minimum wage in effect at the time the wages were paid or would have been paid as described in (d)(i) of this subsection.
(e) Reporting requirements and premium payments.
(i) Every employer who is awarded a forest, range, or timber land services contract must report the contract to the department promptly when it is awarded, and prior to any work being commenced, except as provided in (e)(iii) of this subsection. Employers reporting under the provisions of (e)(iii) of this subsection shall submit the informational report with their quarterly report of premium. The report shall include the following information:
(I) The employers' unified business identification account number (UBI).
(II) Identification of the landowner, firm, or primary contractor who awarded the contract, including the name, address, and phone number of a contact person.
(III) The total contract award.
(IV) Description of the forest, range, or timber land services work to be performed under terms of the contract.
(V) Physical location/site where the work will be performed including legal description.
(VI) Number of acres covered by the contract.
(VII) Dates during which the work will be performed.
(VIII) Estimated payroll and hours to be worked by employees in performance of the contract.
(ii) Upon completion of every contract issued by a landowner or firm that exceeds a total of ten thousand dollars, the contractor primarily responsible for the overall project shall submit in addition to the required informational report described in (e)(i) of this subsection, report the payroll and hours worked under the contract, and payment for required industrial insurance premiums. In the event that the contracted work is not completed within a calendar quarter, interim quarterly reports and premium payments are required for each contract for all work done during the calendar quarter. The first such report and payment is due at the end of the first calendar quarter in which the contract work is begun. Additional interim reports and payments will be submitted each quarter thereafter until the contract is completed. This will be consistent with the quarterly reporting cycle used by other employers. Premiums for a calendar quarter, whether reported or not, shall become due and delinquent on the day immediately following the last day of the month following the calendar quarter.
(iii) A contractor may group contracts issued by a landowner, firm, or other contractor that total less than ten thousand dollars together and submit a combined quarterly report of hours, payroll, and the required premium payment in the same manner and periods as nonforestation, range, or timber land services employers.
(f) Out-of-state employers. Forest, range, or timber land services contractors domiciled outside of Washington state must report on a contract basis regardless of contract size for all forest, range, or timber land services work done in Washington state. Out-of-state employers will not be permitted to have an active Washington state industrial insurance account for reporting forest, range, or timber land services work in the absence of an active Washington forest, range, or timber land services contract.
(g) Work done by subcontract. Any firm primarily responsible for work to be performed under the terms of a forest, range, or timber land services contract, that subcontracts out any work under a forest, range, or timber land services contract must send written notification to the department prior to any work being done by the subcontractor. This notification must include the name, address, Social Security number, farm labor contractor number, (UBI) of each subcontractor, and the amount and description of contract work to be done by subcontract.
(h) Forest, range, or timber land services contract release - verification of hours, payroll, and premium. The department may verify reporting of contractors by way of an on-site visit to an employers' work site. This on-site visit may include close monitoring of employees and employee work hours. Upon receipt of a premium report for a finished contract, the department may conduct an audit of the firm's payroll, employment, and financial records to validate reporting. The department will notify the contractor, and the entity that awarded the contract, of the status of the contractors' account immediately after verification. The landowner, firm, or contractors' premium liability will not be released until the final report for the contract from the primary contractor and any subcontractors has been received and verified by the department.
(i) Premium liability - work done by contract. Washington law (RCW 51.12.070) places the responsibility for industrial insurance premium payments primarily and directly upon the person, firm, or corporation who lets a contract for all covered employment involved in the fulfillment of the contract terms. Any such person, firm, or corporation letting a contract is authorized to collect from the contractor the full amount payable in premiums. The contractor is in turn authorized to collect premiums from any subcontractor they may employ his or her proportionate amount of the premium payment.
To eliminate premium liability for work done by contract permitted by Title 51 RCW, any person, firm, or corporation who lets a contract for forest, range, or timber land services work must submit a copy of the contract they have let to the department and verify that all premiums due under the contract have been paid.
Each contract submitted to the department must include within its body, or on a separate addendum, all of the following items:
(I) The name of the contractor who has been engaged to perform the work;
(II) The contractor's UBI number;
(III) The contractor's farm labor contractor number;
(IV) The total contract award;
(V) The date the work is to be commenced; a description of the work to be performed including any pertinent acreage information;
(VI) Location where the work is to be performed;
(VII) A contact name and phone number of the person, firm, or corporation who let the contract;
(VIII) The total estimated wages to be paid by the contractor and any subcontractors;
(IX) The amount to be subcontracted out if such subcontracting is permitted under the terms of the contract;
(X) The total estimated number of worker hours anticipated by the contractor and his/her subcontractors in the fulfillment of the contract terms;
(j) Reports to be mailed to the department. All contracts, reports, and information required by this section are to be sent to:
The Department of Labor and Industries
Reforestation Team 8
P.O. Box 44168
Tumwater, Washington 98504-4168
(k) Rule applicability. If any portion of this section is
declared invalid, only that portion is repealed. The balance of
the section shall remain in effect.
(5) Logging and/or tree thinning--Mechanized operations--Industry rule. The following subsection shall apply to all employers assigned to report worker hours in risk classification 5005, WAC 296-17-66003.
(a) Every employer having operations subject to risk classification 5005 "logging and/or tree thinning - mechanized operations" shall have their operations surveyed by labor and industries insurance services staff prior to the assignment of risk classification 5005 to their account. Annual surveys will be required after the initial survey to retain the risk classification assignment.
(b) Every employer as a prerequisite of being assigned risk classification 5005 and having exposure (work hours) which is reportable under other risk classifications assigned to the employer shall be required to establish a separate subaccount for the purpose of reporting exposure (work hours) and paying premiums under this risk classification (5005). Except as otherwise provided for in this rule, only exposure (work hours) applicable to work covered by risk classification 5005 shall be reported in this subaccount. In the event that the employer's only other reportable exposure (work hours) is subject to one of the standard exception risk classifications, or the shop or yard risk classification then all exposure (work hours) will be reported under a single main account.
(c) Every employer assigned to report exposure (work hours) in risk classification 5005 shall supply an addendum report with their quarterly premium report which lists the name of each employee reported under this classification during the quarter, the Social Security number of such worker, the piece or pieces of equipment the employee operated during the quarter, the number of hours worked by the employee during the quarter, and the wages earned by the employee during the quarter.
(6) Special drywall industry rule.
(a) Why are we changing the way you pay premiums? Under Washington law (RCW 51.16.035), we are given the authority to establish how workers' compensation insurance rates are computed. For most industries, workers' compensation insurance rates are based on hours worked by employees. While the worker hour system works well for most industries, this method of paying premium can be unfair when a large segment of workers within an industry are not paid an hourly wage. The drywall industry is one in which many workers are paid on the basis of material installed, finished, stocked and/or scrapped (piece work), not the hours they work. As a result, employers have developed a variety of different ways of converting payroll to hours worked to comply with our hourly reporting requirements. In many instances the conversion of payroll to hours worked has resulted in the under reporting of work hours to us. Under reporting results in higher premium rates which you pay. To help remedy the problems caused by using work hours as the basis of how you pay premiums, and to provide greater fairness to employers engaged in drywall work, the premium for classifications 0524, 0526, 0527, 0528, 0529, 0530, 0531, 0532, 0533, and 0534 is based on material (square feet).
(b) How can I qualify for a discounted rate? For each drywall industry classification, we will establish a second classification covering the same activity. The second classification will carry a discounted rate. To qualify for a discounted classification and rate you will be required to meet all of the following conditions:
(i) Prior to the end of the quarter that you want the discounted classifications and rates to be applied to your business, you must attend two workshops that we will offer. For example, if you want the discounted classifications and rates to apply to your business for the third quarter 1997 (July 1 through September 30, 1997), you must attend the two workshops by September 30, 1997. One of the workshops covers claims and risk management practices. The other workshop will cover premium reporting and recordkeeping. The two workshops may be offered together or separately. Be sure to sign in so that you receive credit for attending the workshops.
(ii) Provide us with a signed and completed voluntary release of information form that we will provide to you or your representative at the workshops. We will use this release form to obtain material and supply/purchase sales records from the material supply dealer(s) that you use in the event of an audit. This will aid us as we verify the information you supply us on your premium and supplemental reports. If we need to verify the information that you supplied us, we will send you written notice before we contact your material supply dealer(s). We must receive this release form prior to the end of the quarter in which you want the discounted classifications and rates to become effective. For example, if you want the discounted classifications and rates to apply to your business for the third quarter 1997 (July 1 through September 30, 1997), we must receive your signed and completed release of information form by September 30, 1997. You can complete the voluntary release form at the workshop and give it to our representative at the workshop or mail it to:
Labor and Industries
Employer Services - Drywall Manager
P.O. Box 44166
Olympia, Washington 98504-4166
(iii) Submit complete and accurate premium reports when they
are due and be current with all premium reports and payments. If
you owe us money (premiums) for any quarter or period prior to
December 31, 1996, we will allow you to report in the discounted
classifications. To meet this condition you must file all
reports required by this section when due; and if you have not
paid premiums which were due for any quarterly report you
submitted to us prior to and including the fourth quarter 1996
(October 1, through December 31, 1996), either pay the balance
due immediately or maintain a current payment agreement with us
for any past due premium. For purposes of this section, a
"current payment agreement" is a written legal agreement which we
have approved and entered into with you. This agreement will set
forth your unpaid premium obligation, any applicable penalties
and interest that must be paid, the amount of each installment
(payment) and a schedule of payment due dates. If you fail to
make any payment covered in a payment agreement you will lose the
right to use the discounted classifications and rates. You will
not be allowed to use a discounted classification or rate if you
fail to submit reports, or make premium payments on time for