WSR 14-03-111
PROPOSED RULES
DEPARTMENT OF
LABOR AND INDUSTRIES
[Filed January 21, 2014, 11:47 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 13-18-061.
Title of Rule and Other Identifying Information: Industrial insurance, WAC 296-17-31017 Multiple classifications and 296-17-310171 How to report hours for employees supporting multiple business operations.
Hearing Location(s): Department of Labor and Industries, 7273 Linderson Way S.W., Tumwater, WA 98504, on March 4, 2014, at 9:00 a.m.
Date of Intended Adoption: May 30, 2014.
Submit Written Comments to: Colleen Nelson, Department of Labor and Industries, P.O. Box 44148, Tumwater, WA 98504, e-mail Colleen.Nelson@Lni.wa.gov, fax (360) 902-4988, by March 4, 2014.
Assistance for Persons with Disabilities: Contact office of information and assistance by February 25, 2014, TTY (360) 902-5797.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rule making repeals WAC 296-17-310171 How to report hours for employees supporting multiple business operations. It amends WAC 296-17-31017 Multiple classifications. The multiple classifications rule (2) specifically prohibits employers from having more than one basic classification assigned to his/her business unless the employer has "… different employees in each business." The former WAC allows an employer to report covered workers in more than one basic risk classification providing that the employer maintains adequate records to support the reporting and is consistent with the language in WAC 296-17-31017(1). In order to qualify to report employees in more than one basic classification, an employer had to go through the difficulty of determining their governing class, which sometimes required them to determine their expected losses. This was too difficult for the employer to comply with agency requirements. The proposed rule making greatly simplifies reporting for employers. If an employer qualifies for the more than one basic classification, they may have the same employees work in multiple operations and report them in more than one basic classification as long as they maintain adequate payroll and time records. If an employer cannot or will not maintain work records, then the employee with risk exposure to a higher rated classification will be reported in the higher rated classification.
Reasons Supporting Proposal: The proposed rule making repeals WAC 296-17-310171. The agency will maintain WAC 296-17-31017(1) and amend WAC 296-17-31017(2), which contradicts WAC 296-17-310171 and department practice.
Statutory Authority for Adoption: RCW 51.04.020(1) General authority.
Statute Being Implemented: RCW 51.04.020.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of labor and industries, governmental.
Name of Agency Personnel Responsible for Drafting: Richard Bredeson, Tumwater, Washington, (360) 902-4985; Implementation: Doug Stewart, Tumwater, Washington, (360) 902-4826; and Enforcement: Vickie Kennedy, Tumwater, Washington, (360) 902-4777.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed rule making will not have an economic impact on small business, nor will it have a school district fiscal impact.
A cost-benefit analysis is not required under RCW 34.05.328. The proposed rule making allows employers to use the same employees in multiple business operations when the employer qualifies.
January 21, 2014
Joel Sacks
Director
AMENDATORY SECTION (Amending WSR 13-11-128, filed 5/21/13, effective 7/1/13)
WAC 296-17-31017 Multiple classifications.
(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).
Whenever you have more than one classification assigned to your account, you must keep detailed records of the actual time spent by each employee in each classification. An explanation of payroll records you must keep can be found under WAC 296-17-35201. 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 your business operations.
(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.
In these instances we will assign additional basic classifications only if all of the following conditions are met:
• 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.
If all of the above five conditions are not met, then the operations of the secondary business will be reported in the highest rated classification that applies to the employer.
(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 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 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."
(5) 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.))
Yes, sometimes we will give you more than one basic classification because:
• The basic classification that describes your business specifies certain duties that must be reported separately.
• You have employees performing work described in the general exclusions, WAC 296-17-31018(4).
• You are a contractor with workers performing more than one phase of construction, as described in WAC 296-17-31013.
• You operate a farm that raises more than one type of crop or animal, as described in WAC 296-17-31014.
We also may assign more than one basic classification when a single classification does not describe all of your business operations because you have multiple enterprises.
A multiple enterprise is when you:
• Operate a secondary business with operations we do not normally consider related to your other business operations; or
• Have multiple retail stores.
When all four of the following conditions apply, we will add a basic classification(s) for a multiple enterprise:
• You maintain accurate payroll records that clearly distinguish the work performed for each business.
• Each business is physically separated and distinct.
• Each business can operate independently of any others. If one business closes, any others are able to continue on their own.
• The classifications are permitted to be assigned together by classification descriptions and general reporting rules.
If any of these conditions do not apply, we will assign your firm the classification(s) that identifies:
• Your principal business (this is the business that has the greatest number of hours); and
• Any secondary business operations that are higher rated than your principal business.
Note:
Whenever you have more than one classification assigned to your account, you must keep accurate records of the hours (or alternative reporting units) worked by each employee in each classification. Using percentages, averages, or estimates is not permitted. If you do not have original time card or time book entries to support how you are reporting, all worker hours in question will be assigned to the highest rated classification to which the worker was exposed. An explanation of necessary payroll records can be found under WAC 296-17-35201.
(2) My business is assigned a basic classification and a standard exception classification. I have an employee who works in both classifications. Can I divide this employee's hours (or alternative units) between the two classifications on my quarterly report?
Normally you cannot report employees in a standard exception classification if they also perform duties covered by a basic classification. If any of their work is covered by a basic classification, then all of their hours (or alternative reporting units) must be reported in the basic classification.
The only time you are permitted to divide a worker's hours between a standard exception classification and a basic classification is when the basic classification is assigned to you because it is a general exclusion under WAC 296-17-31018(4).
(3) Can I divide an employee's hours between two standard exception classifications on my quarterly report?
No, you cannot divide employees' hours between two standard exception classifications. You must report all of their hours in the highest rated standard exception classification applicable to their work.
(4) I have more than one basic classification assigned to my business and I have employees who work in more than one of these classifications. Can I divide their hours between these basic classifications on my quarterly report?
Yes, you may divide an employee's hours between basic classifications when:
• The classification descriptions allow a division of hours; and
• You maintain records on each employee and the department can determine from those records the hours worked in each classification.
If the classification descriptions do not allow a division of hours, or if you do not maintain adequate records, you must report the workers' hours in the highest rated risk classification applicable to your business, unless your records show that a worker did not work in that classification.
For the following examples, suppose an employer has the classifications and rates shown below:
Risk Class
Description
Rates*
0507 05
Roofing work
$7.37/hour
0510 00
Wood frame building construction
$4.71/hour
0513 00
Interior finish carpentry
$2.01/hour
Example 1: If the employer does not keep records of which classifications an employee worked in, all of the employee's hours must be reported in classification 0507.
Example 2: If the employer's records show the employee worked only in classifications 0510 and 0513, but no time records were kept, all of the employee's hours must be reported in classification 0510.
Example 3: If the employer's records show the hours the employee worked in classification 0510 and the hours the employee worked in 0513, the employer may report the employee's hours in both classifications.
*
The rates above do not reflect actual rates and are only intended for the purpose of this example.
(5) I have employees with duties that support more than one basic classification, but it is not possible to distinguish their hours between classifications. How do I report these workers' hours?
Sometimes employers are unable to divide a worker's hours between two or more classifications because the work simultaneously supports more than one basic classification. When this occurs, you must report the work in the highest rated classification that the work supports.
Example 1: You operate both a motel with classification 4905, and a restaurant with classification 3905. You have a laundry facility that cleans the linens for both the restaurant and for the motel and you choose not to distinguish schedules for washing the linens separately. If you do not maintain work or payroll records, you must report your employees in the higher premium rate classification.
If classification 3905 is higher than classification 4905, you need to report the laundry operations in classification 3905.
If classification 4905 is higher than classification 3905, you need to report the laundry operations in classification 4905.
Example 2: You have a floor covering store and also offers installation services to your customers. Your store operations are under classification 6309 and your employees performing the installation service are under classification 0502.
Since delivery is included in both your classifications, when your workers deliver floor covering to one of your own job sites, their drive time must be reported in whichever of your classifications is higher premium rated.
Example 3: You are a construction contractor and pay your workers for driving to and from the construction sites. Some of these workers work in more than one construction classification. You can keep records of when they work in each classification and report their hours at the job site accordingly, but all of their drive time on a given day must be reported in the highest rated construction classification they worked in the same day.
(6) How can I find the rates for the classifications assigned to my account?
Each of your classifications has a new rate assigned to it yearly. Your rates are on your annual rate notice and your quarterly report, or you may obtain your rates by contacting your account manager.
REPEALER
The following section of the Washington Administrative Code is repealed:
WAC 296-17-310171
How to report hours for employees supporting multiple business operations.