WSR 97-08-051
PROPOSED RULES
DEPARTMENT OF
LABOR AND INDUSTRIES
[Filed March 31, 1997, 11:35 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 96-22-107 filed on November 6, 1996.
Title of Rule: Chapter 296-17 WAC, Workers' compensation classifications and reporting rules--Drywall industry.
Purpose: Agency is proposing to modify drywall rules through the addition of nine new classifications and a provision allowing owners to deduct the material they install from the amount to be reported to the Department of Labor and Industries.
Statutory Authority for Adoption: RCW 51.04.020(1), 51.16.035, and 51.16.100.
Statute Being Implemented: RCW 51.16.035.
Summary: The department proposes to amend WAC 296-17-45006, special drywall industry rules; amend WAC 296-17-45003, general construction industry rules; establish nine new risk classifications for the drywall industry, WAC 296-17-52118 through 296-17-52126; amend WAC 296-17-89502, base rates table for the new classifications; and repeal three existing classification definitions, WAC 296-17-52114, 296-17-52115, and 296-17-52117.
Reasons Supporting Proposal: RCW 51.16.035 requires labor and industries to maintain a classification plan and rating system which facilitates the collection of premium and encourages workplace safety. The changes proposed are intended to achieve this goal on a voluntary basis.
Name of Agency Personnel Responsible for Drafting: Frank Romero, Classification Services, Tumwater, Washington, (360) 902-4748; Implementation: Kathy Kimbel, Program Manager for Employer Services, Tumwater, Washington, (360) 902-4835; and Enforcement: Doug Mathers, Chief Field Auditor, Tumwater, Washington, (360) 902-4750.
Name of Proponent: Department of Labor and Industries, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: Contractors have asked labor and industries to change the way premiums are charged within the drywall industry. 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 ways of converting payroll to hours worked. 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 premiums paid by employers. To help remedy the problem of under reporting and provide greater fairness to employers engaged in drywall work the basis of premium is proposed to be changed from hours worked to material installed. To help minimize the effects that this change might have on the affected contractor community the department is offering discounted rates to employers that meet certain conditions. A special provision is also provided that allows owners of business to subtract the material they install from the total when reporting and paying premiums.
Proposal Changes the Following Existing Rules: The proposed rules, change the basis of how workers' compensation premiums are paid; establish nine new classifications, four of which, have discounted rates; repeals three existing drywall classifications; establishes new base rates for the classifications on a material basis (square feet); and modifies an existing general reporting rule applicable to construction contractors.
No small business economic impact statement has been prepared under chapter 19.85 RCW. Contractors are currently keeping material records for other purposes including the pricing of their services and making bid proposals. The proposed premium rates are set at the same overall level as the rates adopted under a worker hour system for 1997 so the industry will face no added costs with these changes. Industrial Insurance Laws do not provide or allow different treatment for small businesses. The proposed rules do not require employers to purchase new equipment, add employees or keep new records. Changes included in this filing should further reduce the amount of premium employers are required to pay.
Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. Agency believes that section 201 does not apply to the rules covered by this filing. The agency has voluntarily complied with section 201 with regard to this filing. Analysis pertinent to this filing is contained in the department's rule-making file.
Hearing Location: Auditorium, 7273 Linderson Way S.W., Tumwater, WA, on May 22, 1997, at 10:00 a.m.
Assistance for Persons with Disabilities: Contact Classification Services at (360) 902-4776, by May 5, 1997.
Submit Written Comments to: FAX (360) 902-4721, by May 21, 1997.
Date of Intended Adoption: May 27, 1997.
March 31, 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).
[]
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).
[]
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).
[]
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).
[]
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).
[]
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).
[]
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).
[]
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).
[]
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).
[]
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.