WSR 97-01-122
PROPOSED RULES
DEPARTMENT OF
LABOR AND INDUSTRIES
[Filed December 19, 1996, 10:49 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 change the basis of premium for the drywall industry from worker hours to material installed and providing a discounted rate to contractors who comply with special reporting rules.
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 establish a new general reporting rule specific to the drywall industry (WAC 296-17-45006); amend one existing general reporting rule (WAC 296-17-45003); establish four new risk classifications for the drywall industry (WAC 296-17-52114 through 296-17-52117); establish a new base rates table for the new classifications (WAC 296-17-89502); and repeal two existing classification definitions (WAC 296-17-52107 and 296-17-52112).
Reasons Supporting Proposal: RCW 51.16.035 requires the Department of 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 the Department of 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.
Proposal Changes the Following Existing Rules: The proposed rules change the basis of workers' compensation premiums are paid; establish four new classifications, two of which have discounted rates; repeals the two existing drywall classifications; established new base rates for the classifications on a material installed 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.
Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. RCW 51.16.035 requires the Department of Labor and Industries to establish a classification plan and rate system which facilitates the collection of premiums and encourages a safe work environment. The system is based on legislative standards and rate setting which are exempt.
Hearing Location: Auditorium, 7273 Linderson Way S.W., Tumwater, WA, on February 3, 1997, at 10:00 a.m.
Assistance for Persons with Disabilities: Contact Frank Romero by January 30, 1997.
Submit Written Comments to: FAX (360) 902-4721, by February 2, 1997.
Date of Intended Adoption: February 24, 1997.
December 19, 1996
Mike Watson
for Mark O. Brown
Director
AMENDATORY SECTION (Amending WSR 96-12-039, filed 5/31/96, effective
7/1/96)
WAC 296-17-45003 ((Special construction industry rule.)) Building,
construction and erection contractor reporting rules. (((1) Construction
or erection operations. Each distinct type of construction or erection
operation at a job site or location shall be assigned to the basic
classification describing that operation provided separate payroll/time
records are maintained for each such operation and which show in detail
the name, rate of pay, and actual hours worked for each employee.
In the event payroll/time records are not maintained to support
separate classification assignments the entire number of work hours in
question shall be assigned to the highest rated classification which
applies to the job site or location where the operation is being
performed. The department may upon request by an employer (contractor)
prior to the commencement of a contract authorize the use of a single
basic classification to cover an entire project.
Selection of the basic classification will be determined by
estimating the work hours for each construction operation at the site or
location and calculating the premiums by each applicable classification--total estimated premiums will then be divided by the total estimated
hours to produce an average rate. The basic classification assigned to
the employer that carries the rate nearest to the estimated average rate
will be selected provided that if the estimated average rate is equally
between two classifications assigned to the employer the lower of the two
rates will be selected.
Separate construction or erection classifications shall not be
assigned to any operation which is within the scope of another basic
classification assigned to such a job site or location. For example a
carpenter employed by a concrete contractor to build foundation forms is
to be assigned to a concrete construction classification and not a
carpentry classification.
(2) Subcontracted work. The general contractor as defined in RCW
18.27.010, who subcontracts work out to others must ensure that such
subcontractors are properly registered and licensed under chapter 18.27
or 19.28 RCW as applicable to avoid being held liable for industrial
insurance premiums for such subcontractors (RCW 51.12.070). At the time
of audit or within thirty days thereafter the general contractor or
specialist contractor as the case may be who has subcontracted work out
to others must provide the department's traveling auditors, agents or
assistants a list containing the names of such subcontractors, their
contractors registration of license number, the expiration date of such
registration or license, and their uniform business identifier or
industrial insurance account number. Failure by the general contractor
or specialist contractor to provide this record at the time of audit may
result in a premium assessment being made for each subcontractor used by
the general contractor or specialist contractor.
(3) Debris removal. Work hours related to the removal of
construction materials equipment or debris from a job site or location
by employees of a general contractor or specialist contractor are to be
assigned to the construction classification applicable to the phase of
construction work being supported by such clean up personnel. However,
if clean up personnel are involved in general job site or location clean
up then risk classification 0510 or 0518 will apply as applicable to the
job site or location. Employees of a specialist contractor engaged
exclusively in debris removal services shall be assigned to risk
classification 0510 or 0518 as applicable to the job site or location
serviced.
(4) Scaffolding, hoists, and towers. Work hours related to the
installation, maintenance or removal of scaffolding, hod hoists,
distributing towers, sidewalk bridges, and elevators by employees of a
general contractor or specialist contractor are to be assigned to the
construction classification applicable to the phase of construction being
supported. However, if the scaffolding, hod hoists, distributing towers,
sidewalk bridges and elevators being installed supports several phases
of construction then risk classification 0510 or 0518 will apply as
applicable to the jobsite or location. Employees of a specialist
contractor engaged exclusively in work described in this subsection shall
be assigned to risk classification 0510 or 0518 as applicable to the job
site or location.
(5) Preoccupancy clean up. Work hours related to preoccupancy clean
up by employees of a general contractor or specialist contractor are to
be assigned to classification 6602 "Janitors, N.O.C." provided that the
term "preoccupancy clean up" for purposes of this rule is limited in
scope to dusting, washing windows, vacuuming carpets, mopping floors, and
cleaning fixtures. A division of individual work hours between
classification 6602 and any construction, erection, or shop
classification is not allowed. Employees having duties that fall within
a construction classification and who are also engaged in preoccupancy
clean up are to be reported in the applicable construction
classification.
(6) Shop or yard operations. Construction or erection contractors
who maintain a permanent shop or yard operation may report the work hours
of such employees in classification 5206, provided that this
classification shall not apply to any yard or shop employee during any
work shift in which the yard or shop employee has duties subject to
another classification or if the classification assigned to the employer
requires a separate treatment for shop operations.
(7) Construction superintendent or project manager. Applies to
construction superintendents or project managers applicable to both
general and specialty contractors for construction or erection projects.
Construction superintendents spend some time in an office and spend the
remainder of time visiting various job sites to confer with construction
foreman to keep track of the progress occurring at each construction site
or project location. Project managers are generally temporarily
stationed at the construction site or project location and confined to
a modular type of clerical office to schedule activities and arrival of
supplies applicable to the job or project. Construction superintendents
and project managers can be assigned classification 4900 provided such
employees have no direct control over work crews and are not performing
construction labor at the job site or project location. An employee
performing superintendent or project manager duties and some type of
construction labor or control over a work crew shall not be permitted a
division of work hours between classification 4900 and any other
construction classification, all work hours are to be reported in the
applicable construction classification.)) (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, 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 should 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 assigned to your business.
(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-XXXX 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. 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."
(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."
(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."
(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 51.16.035. 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.]
NEW SECTION
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 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.
(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 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 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 make premium payments on time. 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 amount of material they installed or finished during the quarter, the wages you paid them during the quarter, the basis for how they are paid (piece rate, commission, hourly, etc.,) and their rate of pay per unit/hour.
(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 sales records. This will aid us as we verify the information you supply us on your premium and supplemental reports.
(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.
(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.
(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? 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 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.
[]
NEW SECTION
WAC 296-17-52114 Classification 0522.
Wallboard installation - nondiscounted rate
This classification excludes wallboard taping and texturing work which is to be reported separately in classification 0523.
Special note: The basis of premium for this classification is material
installed (square feet).
[]
NEW SECTION
WAC 296-17-52115 Classification 0523.
Wallboard taping and texturing - nondiscounted rate
This classification includes incidental painting when performed by employees of an employer subject to this classification but excludes wallboard installation which is to be reported separately in classification 0522.
Special note: The basis of premium for this classification is material
finished (square feet).
[]
NEW SECTION
WAC 296-17-52116 Classification 0524.
Wallboard installation - discounted rate
This classification excludes wallboard taping and texturing work which is to be reported separately in classification 0525.
Special note: The basis of premium for this classification is material
installed (square feet).
[]
NEW SECTION
WAC 296-17-52117 Classification 0525.
Wallboard taping and texturing - discounted rate
This classification includes incidental painting when performed by employees of an employer subject to this classification but excludes wallboard installation which is to be reported separately in classification 0524.
Special note: The basis of premium for this classification is material
finished (square feet).
[]
NEW SECTION
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 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 0.0003
0525 0.0100 0.0039 0.0003
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REPEALER
The following sections of the Washington Administrative Code are
repealed:
WAC 296-17-52107 Classification 0515.
WAC 296-17-52112 Classification 0520.