WSR 97-08-043

EMERGENCY RULES

DEPARTMENT OF

LABOR AND INDUSTRIES

[Filed March 28, 1997, 11:28 a.m., effective April 1, 1997]

Date of Adoption: March 28, 1997.

Purpose: Adopt special drywall rules, classifications and base rates to implement changes in how workers' compensation premiums are charged. Industry representatives have asked that changes be implemented on an emergency basis effective April 1, 1997.

Citation of Existing Rules Affected by this Order: Repealing WAC 296-17-52114, 296-17-52115 and 296-17-52117; and amending WAC 296-17-45003, 296-17-45006, and 296-17-89502.

Statutory Authority for Adoption: RCW 51.04.020(1), 51.16.035, and 51.16.100.

Under RCW 34.05.350 the agency for good cause finds that immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest.

Reasons for this Finding: Businesses have requested these rule changes so that owners are permitted to deduct the amount of material they install. If these changes are not implemented, owners will be required to pay premiums on work they perform, which is excluded by law.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 9, amended 4, repealed 3.

Number of Sections Adopted on the Agency's own Initiative: New 0, amended 0, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.

Number of Sections Adopted using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 9, amended 4, repealed 3.

Effective Date of Rule: April 1, 1997.

March 19, 1997

Gary Moore

Director

AMENDATORY SECTION (Amending WSR 97-06-007, filed 2/24/97, effective 4/1/97)

WAC 296-17-45003 Building, construction and erection contractor reporting rules. (1) 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, 0522, 0523, 0524, 0525, 0526, 0527, 0528, 0529, 0530, 0531, 0532, 0533, 0534, 0601, 0602, 0603, 0607, 0608, and 0701.

(2) How are classifications assigned to my business? We will assign a classification or number of separate classifications which describe the business(es) you are involved in. For example, if you are a plumbing contractor we will assign a plumbing classification to your business (classification 0306). The plumbing classification covers all of the various phases of plumbing work such as rough in plumbing work, house to sewer hookup if performed by employees of the plumbing contractor and installation of the fixtures. In some cases we will assign several classifications to your business. For example, if you were building a house (single-family dwelling) and you were going to do the foundation, framing, roofing and finish carpentry we would assign your business classification 0217 for the foundation work; classification 0510 for framing the structure; classification 0507 for installing the roofing material; and classification 0513 for finish carpentry work. We will not assign separate classifications to your business for work activities which are included within a classification which we have assigned to your business. For example, if you are a concrete foundation contractor and you employ a carpenter to make and set foundation forms, you would report the carpenters hours in the concrete foundation classification (0217) and not a carpentry classification (0510).

(3) What happens if I have several classifications assigned to my business but I did not keep track of the time my employees spent on the different phases of construction. If we have assigned more than one classification to your business, you must keep track of the actual time your employees spend under each classification which we have assigned to your business. If we audit your business, and we find that you did not keep accurate time records required by WAC 296-17-35201 we will assign all work hours in question to the highest rated classification applicable to the work hours in question.

(4) Who can I call if questions on how to use the different classification which you have assigned to my business? We would be happy to assist you with this and other questions you might have. You can call us at (360) 902-4817 Monday through Friday, between the hours of 8:00 a.m. and 5:00 p.m. Pacific time and one of our representatives will assist you.

(5) Can I report all of my construction operations under one classification? Yes, you can report all construction operations in one classification if we have preapproved it. To obtain this approval you must contact your policy manager. Your policy manager will ask you for a breakdown of the estimated project hours by phase of construction for the construction project. We will send you a letter confirming the classification which will apply to a project when you have requested a single classification.

(6) If you approve a single classification for one of my projects does this preapproval apply to all of my projects? No, the single classification approval only applies to a specific project or group of projects which are specified in our letter to you.

(7) Can I be held liable for unpaid premiums of subcontractors which I use? Yes, if you want to avoid being held responsible for unpaid premiums on work you subcontract out to others (RCW 51.12.070), you should only use currently licensed or registered contractors (chapter 18.27 or 19.28 RCW).

(8) How can I be sure that a contractor is licensed or registered with you? The best way is to ask the contractor for their license or registration number and expiration date and then call us to verify that the information is correct. It's a good idea to write this information down somewhere that you can locate easily, it may come in handy in the future. If we audit you, we will ask you for a list of the subcontractors that you have used during a specific period of time, their license or registration number and the expiration date of the license or registration. You can simplify the audit by making and keeping this list as a part of your regular business records.

(9) What happens if you audit me and I do not have a list of the contractors described in subsection (8) of this section? If we audit you, and you are unable to provide us with this list while we are doing the audit, we will allow you a reasonable amount of time to provide us with this list. In the event that you do not provide us this list, or we cannot verify that a contractor that you used has paid premiums on the work you subcontracted to them and they were either not licensed or registered, or we determine that their license or registration was not current when you used them, we will charge you for the premiums they should have paid.

(10) Do I need any other information on subcontracted work? If you purchase materials such as but not limited to roofing material, framing lumber, concrete, or sheet rock, and supply this material to a contractor on a job you are working on, you should keep a record which shows the volume of material you have supplied (square feet) to the contractor; the project name or location; the date when the material was given to the contractor or delivered to the construction site; the approximate completion date of the contracted work; the name of the contractor that performed the work for you; their contractor license or registration number; and the expiration date of their license or registration. We will ask you for this information if we audit your business.

(11) What classification should I use to report construction site cleanup by my employees? You should report the cleanup of construction debris in the same classification that applied to the work which generated the debris unless another classification treatment is provided for in other rules. For example, if you are a roofing contractor and you have an employee pick up roofing debris at the construction (project) site, you would report the employee involved in the site cleanup in the roofing classification (0507). If you are the general contractor at a construction site and have either classification 0510 "wood frame building construction" or classification 0518 "nonwood frame building construction" assigned to your business you would report site cleanup in the classification applicable to the type of building you are constructing. For example, if you are a general contractor and you are engaged in building a single-family wood frame dwelling, you would report construction site cleanup by your employees in classification 0510 "wood frame building construction." An example of where construction site cleanup is treated differently is drywall work. Employees of nonbuilding material dealers engaged in wallboard scrapping are reported in either classification 0529 or classification 0534 as applicable.

(12) I am a construction site clean-up contractor, my employees only pick up construction debris, we do no construction work, what classification do I report site cleanup in? If your employees are cleaning a construction site where a wood frame building was erected you would report their work time in classification 0510 "wood frame building construction." If your employees are cleaning a construction site where a nonwood frame building was erected you would report their work time in classification 0518 "nonwood frame building construction." If your employees are cleaning other nonbuilding construction sites you would report their work time in the same classification that applied to the construction work that generated the nonbuilding construction debris. For example, if you are doing site cleanup for a concrete contractor that was involved in pouring and finishing sidewalks and drive ways, you would report the work time of your employees involved in this construction site clean-up project in classification 0217 "concrete flatwork." The classification treatment of nonbuilding material dealers engaged in wallboard cleanup (scrapping) are to be reported in either classification 0529 or classification 0534 as applicable.

(13) What classification should I use to report the work time of my employees when they are involved in the set up of scaffolding, hoists, cranes, towers or elevators at a construction site? We use the same classification treatment for this type of work as we do with construction site cleanup. For example, if you are a roofing contractor and you have an employee set up scaffolding at the construction (project) site, you would report the employee involved in the set up of scaffolding in the roofing classification (0507). If you are the general contractor at a construction site and have either classification 0510 "wood frame building construction" or classification 0518 "nonwood frame building construction" assigned to your business you would report the set up of scaffolding at the construction in the classification applicable to the type of building you are constructing. For example, if you are a general contractor and you are engaged in building a single-family wood frame dwelling, you would report scaffolding set up by your employees in classification 0510 "wood frame building construction." Helicopter services that are engaged to assist in lifting beams, air conditioning units, statues and other objects on to buildings or structures are to be reported separately in classification 6803.

(14) Is preoccupancy cleanup of a building by my employees classified the same as debris cleanup at a construction site? Since your understanding of what preoccupancy clean-up work is may be different from ours, we need to share with you our understanding before we can answer this question. Our understanding in this area is that preoccupancy cleanup occurs after the building is finished. The clean-up work consists of washing paint and over spray from windows, vacuuming carpets, washing floors and fixtures, and dusting woodwork, doors and cabinets. If you have employees whose duties are limited to this type of cleaning we will allow you to report their work time in classification 6602 "janitors."

(15) If I have an employee who does some construction work, construction site cleanup and preoccupancy cleanup can I divide their work time between the janitor and a construction classification? No, we will not permit you to divide the work time of an employee between the janitor classification and a construction classification. If you have an employee who does preoccupancy clean-up work for you, and that employee also performs other nonpreoccupancy clean-up work for you such as construction work, shop work or construction site debris clean-up work, then you must report all of their work time in the applicable construction or nonshop classification. We would be happy to assist you with this and other questions you might have. You can call us at the phone number listed in subsection (4) of this section and one of our representatives will assist you.

(16) Can I use a shop classification to report the work time of one of my employees who works in my shop or yard? If you have a shop or yard where you maintain and store construction equipment and machinery, and/or store materials which you use in your construction business, you may qualify for a separate shop classification. There are several conditions which must be met before we will assign a shop classification to your business. A separate rule (WAC 296-17-675) describes these conditions. If you would like to see if you qualify for a shop classification you can call us at the phone number listed in subsection (4) of this section and one of our representatives will assist you.

(17) What classification do I use to report my construction superintendent or project manager? We have a special classification (4900) which may apply to your business but there are several conditions which must be met before we will assign this classification to your business. A separate rule (WAC 296-17-64999) describes these conditions. If you would like to see if you qualify for a special classification you can call us at the phone number listed in subsection (4) of this section and one of our representatives will assist you.

[Statutory Authority: RCW 51.04.020, 51.16.035 and 51.32.073. 97-06-007, 296-17-45003, filed 2/24/97, effective 4/1/97. Statutory Authority: RCW 51.16.035. 96-12-039, 296-17-45003, filed 5/31/96, effective 7/1/96. Statutory Authority: RCW 51.04.020(1) and 51.16.035. 90-13-018, 296-17-45003, filed 6/8/90, effective 7/9/90; 89-24-051 (Order 89-22), 296-17-45003, filed 12/1/89, effective 1/1/90.]

AMENDATORY SECTION (Amending WSR 97-06-007, filed 2/24/97, effective 4/1/97)

WAC 296-17-45006 Special drywall industry rule. (1) 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 is 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 (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 0522, 0523, 0524 ((and)), 0525, 0526, 0527, 0528, 0529, 0530, 0531, 0532, 0533, and 0534 is based on material ((installed)) (square feet).

(2) 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:

(a) ((Attend a special claims, risk management and premium reporting workshop which we will offer.)) Attend two workshops that we will offer. One workshop covers claims and risk management practices. The other workshop will cover premium reporting and recordkeeping. Be sure to sign in so that you receive credit for attending.

(b) 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 ((provided that all current reports and premiums are filed and paid on time and you)). To meet this condition you must file all reports required by this section when due; pay the required premiums on time; 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 (December 31, 1996), maintain a current payment agreement with us for any past due premium. You will not be allowed to use a discounted classification if you fail to submit reports ((and)), or make premium payments on time for any period beginning with the first quarter 1997. This requirement applies to any classification assigned to your business and for any exposure (hours, square feet, etc.,) which occurs after January 1, 1997.

(c) Provide us with a supplemental quarterly report which shows by employee the employee's name and Social Security number, the wages you paid them during the quarter, the basis for how they are paid, (piece rate, commission, hourly, etc.,) their rate of pay per unit/hour, and a notation as to whether they are an installer, finisher, scrapper, painter, etc.

(d) Provide us with a voluntary release of information form that we can give to the material supply dealer that you use. We will use this release form to obtain material and supply/purchase sales records 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.

(e) For any work which you subcontract to others, you must maintain the records described in WAC 296-17-45003.

(f) Keep and retain the payroll and employment records described in WAC 296-17-35201.

If you do not meet all of the above conditions, we will not assign the discounted rates to your business and you will be required to pay premiums in the nondiscounted classification(s).

(3) Can I be disqualified from using the discounted rates? Yes, your business will be disqualified from using the discounted premium rates if you do not file premium reports on time; if you fail to pay premiums on time; ((or)) if you under report or misclassify the work performed by your employees; if you fail to maintain the payments in a payment agreement you have entered into with us; or fail to meet any other condition set forth in this rule.

(4) How long will I be disqualified from using the discounted classifications? If we disqualify your business from using the discounted classifications, the disqualification will be for three years (thirty-six months) from the period of last noncompliance.

(5) I have several businesses, if one of my businesses is disqualified from using the discounted rates will that affect my other businesses? Yes, if you have ownership interest in a business which has been disqualified from using the discounted rates, and you also have ownership interest in other construction businesses which have separate industrial insurance accounts or subaccounts, all businesses in which you have ownership interest will be disqualified from using the discounted rates. This includes a business which you own or owned that is in bankruptcy status and for which you have not entered into a payment agreement, if you owe us any money; or money that you owe us which we wrote off as an uncollectible debt.

(6) What if I make a mistake in how I reported to you, should I correct the error? Yes, you should send in a revised report with an explanation of the error you are trying to correct. If we audit your business, and we determine that you have under reported exposure in any classification assigned to your business, all exposure which you reported in the discounted classifications for the audit period will be reclassified to the nondiscounted classifications.

(7) If I disagree with an audit or other decision can I still use the discounted rates while we are resolving the issue? Yes, if you are involved in a dispute with us over the status of an independent contractor, the issue being whether an individual is a covered worker; the proper classification of work your employees performed((,)); or under reporting((,)); you may qualify for the discounted classifications by paying the disputed amount while the issue is under dispute. ((If)) In the event the issue is resolved in your favor we will refund any moneys which you paid which were disputed. We will not pay interest on the refunded amount. If you do not pay the audit balance or disputed amount when requested or post an equivalent bond, you will not be permitted to use any of the discounted classifications.

(8) I am the owner of the business, and I do some of the work myself, can I deduct the work I do from the total square feet to be reported to you? Yes, as an owner of the business you can deduct the amount of work that you did from the total square feet which you are going to report to us.

(9) How do I calculate and report this deduction to you? To claim this deduction you must send us a report which shows by job, project, site or location the total amount of material that was installed or finished at that job, project, site or location; the amount of material which you as the owner installed and/or finished at the job, project, site or location; the hours that it took you to install and/or finish the material you are claiming deduction for, the total material installed and/or finished by employees at the job, project, site or location; and the hours the employees worked by job, project, site or location. This report must accompany the quarterly report in which you are claiming a deduction. If there are several owners, you must supply this information for each owner you wish to claim a deduction for.

[Statutory Authority: RCW 51.04.020, 51.16.035 and 51.32.073. 97-06-007, 296-17-45006, filed 2/24/97, effective 4/1/97.]

NEW SECTION

WAC 296-17-52118 Classification 0526.

Wallboard taping - discounted rate

This classification excludes wallboard installation, wallboard priming and texturing, wallboard stocking, and wallboard scrapping which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material finished (square feet).

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NEW SECTION

WAC 296-17-52119 Classification 0527.

Wallboard priming and texturing - discounted rate

This classification includes incidental painting when performed by employees of an employer subject to this classification, but excludes wallboard installation, wallboard taping, wallboard stocking, and wallboard scrapping which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material finished (square feet).

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NEW SECTION

WAC 296-17-52120 Classification 0528.

Wallboard stocking by nonmaterial dealer employees - discounted rate

This classification excludes wallboard stocking by building material dealer employees which is to reported separately in classification 1101, wallboard installation, wallboard taping, wallboard priming and texturing and wallboard scrapping which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material stocked (square feet).

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NEW SECTION

WAC 296-17-52121 Classification 0529.

Wallboard scrapping by nonmaterial dealer employees - discounted rate

This classification excludes wallboard scrapping by building material dealer employees which is to be reported separately in classification 1101, wallboard installation, wallboard taping, wallboard stocking, and wallboard priming and texturing which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material stocked (square feet).

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NEW SECTION

WAC 296-17-52122 Classification 0530.

Wallboard installation - nondiscounted rate

This classification excludes wallboard taping, wallboard priming, wallboard texturing work, wallboard stocking and wallboard scrapping which is to be reported separately in the classification applicable to the work being performed. This classification does not apply to employees of a building material dealer engaged in stocking or scrapping which are to be reported separately in classification 1101.

Special note: The basis of premium for this classification is material installed (square feet).

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NEW SECTION

WAC 296-17-52123 Classification 0531.

Wallboard taping - nondiscounted rate

This classification excludes wallboard installation, wallboard priming and texturing, wallboard stocking, and wallboard scrapping which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material finished (square feet).

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NEW SECTION

WAC 296-17-52124 Classification 0532.

Wallboard priming and texturing - nondiscounted rate

This classification includes incidental painting when performed by employees of an employer subject to this classification, but excludes wallboard installation, wallboard taping, wallboard stocking, and wallboard scrapping which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material finished (square feet).

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NEW SECTION

WAC 296-17-52125 Classification 0533.

Wallboard stocking by nonmaterial dealer employees - nondiscounted rate

This classification excludes wallboard stocking by building material dealer employees which is to be reported separately in classification 1101, wallboard installation, wallboard taping, wallboard priming and texturing and wallboard scrapping which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material stocked (square feet).

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NEW SECTION

WAC 296-17-52126 Classification 0534.

Wallboard scrapping by nonmaterial dealer employees - nondiscounted rate

This classification excludes wallboard scrapping by building material dealer employees which is to be reported separately in classification 1101, wallboard installation, wallboard taping, wallboard stocking, and wallboard priming and texturing which is to be reported separately in classification applicable to the work being performed.

Special note: The basis of premium for this classification is material stocked (square feet).

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AMENDATORY SECTION (Amending WSR 97-06-007, filed 2/24/97, effective 4/1/97)

WAC 296-17-89502 Industrial insurance accident fund, medical aid and supplemental pension rates by class of industry for nonhourly rated classifications. The base rates as set forth below are for classifications whose premium rates are based on units other than hours worked.

Base Rates Effective

((January)) April 1, 1997

Accident Medical Aid Supplemental

Class Fund Fund Pension Fund

0522 0.0242 0.0090 0.0003

0523 0.0151 0.0059 0.0003

0524 ((0.0160 0.0060))

0.0145 0.0054 0.0003

0525 0.0100 0.0039 0.0003

0526 0.0093 0.0036 0.0003

0527 0.0007 0.0003 0.0001

0528 0.0024 0.0009 0.0001

0529 0.0015 0.0006 0.0001

0530 0.0218 0.0081 0.0003

0531 0.0141 0.0055 0.0003

0532 0.0010 0.0004 0.0001

0533 0.0036 0.0014 0.0001

0534 0.0024 0.0009 0.0001



[Statutory Authority: RCW 51.04.020, 51.16.035 and 51.32.073. 97-06-007, 296-17-89502, filed 2/24/97, effective 4/1/97.]

REPEALER

The following sections of the Washington Administrative Code are repealed:

WAC 296-17-52114 Classification 0522.

WAC 296-17-52115 Classification 0523.

WAC 296-17-52117 Classification 0525.

Legislature Code Reviser

Register

Washington State Code Reviser's Office