WSR 02-09-093

PERMANENT RULES

DEPARTMENT OF

LABOR AND INDUSTRIES

[ Filed April 17, 2002, 10:38 a.m. , effective July 1, 2002 ]

Date of Adoption: April 17, 2002.

Purpose: Agency proposes to adopt revisions to the general reporting rules and classification plan. This includes one general reporting rule and four drywall risk classification definitions applicable to chapter 296-17 WAC for workers' compensation insurance underwritten by the Department of Labor and Industries.

Citation of Existing Rules Affected by this Order: Amending WAC 296-17-35203, 296-17-52140, 296-17-52141, 296-17-52150, and 296-17-52151.

Statutory Authority for Adoption: RCW 51.04.020, 51.16.035, 51.32.073.

Adopted under notice filed as WSR 01-23-079 [02-03-123] on January 23, 2002.

Changes Other than Editing from Proposed to Adopted Version: Proposed rule filed as WSR 01-23-079 [02-03-123] identified effective date of adopted changes as May 1, 2002. Contained in the adopted version is an effective date of July 1, 2002.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 5, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 5, Repealed 0.
Effective Date of Rule: July 1, 2002.

April 17, 2002

Gary Moore

Director

OTS-5394.2


AMENDATORY SECTION(Amending WSR 01-23-059, filed 11/20/01, effective 1/1/02)

WAC 296-17-35203   Special reporting instruction.   (1) Professional and semiprofessional athletic teams. Athletes assigned to a Washington-domiciled sports team are mandatorily covered by Washington industrial insurance: Provided, That a professional athlete who is under contract with a parent team domiciled outside of the state of Washington while assigned to a team domiciled within Washington is subject to mandatory coverage by Washington industrial insurance unless the player and employer (parent team) have agreed in writing as to which state shall provide coverage in accordance with RCW 51.12.120(5).

The following rules shall apply to the written agreement:

(a) Agreement must be in writing and signed by the employer and the individual athlete.

(b) Agreement must specify the state that is to provide coverage. The state agreed upon to provide coverage must be a state in which the player's team, during the course of the season, will engage in an athletic event. For example, if the Washington-based team is a part of a league with teams in only Washington, Oregon, and Idaho, the player and the employer can agree to any of those three states to provide coverage. However, they could not agree to have California provide the coverage as this would not qualify as a state in which the player regularly performs assigned duties.

(c) The state agreed upon accepts responsibility for providing coverage and acknowledges such to the department by certified mail.

(d) Agreement and certification by the other state must be received by this department's underwriting section prior to any injury incurred by the athlete.

(e) Agreement will be for one season only commencing with the assigning of the player to a particular team. A separate agreement and certification must be on file for each additional season.

Failure to meet all of these requirements will result in the athlete being considered a Washington worker for premium and benefit purposes until such time as all requirements have been met.

Professional sports teams who are domiciled outside the state of Washington and who participate in sporting events with Washington-domiciled teams are not subject to Washington industrial insurance for their team members while in this state. These out-of-state teams are not considered employers subject to Title 51 on the basis that they are not conducting a business within this state.

(2) Excluded employments. Any employer having any person in their employ excluded from industrial insurance whose application for coverage under the elective adoption provisions of RCW 51.12.110 or authority of RCW 51.12.095 or 51.32.030 has been accepted by the director shall report and pay premium on the actual hours worked for each such person who is paid on an hourly, salaried-part time, percentage of profit or piece basis; or one hundred sixty hours per month for any such person paid on a salary basis employed full time. In the event records disclosing actual hours worked are not maintained by the employer for any person paid on an hourly, salaried-part time, percentage of profits or piece basis the worker hours of such person shall be determined by dividing the gross wages of such person by the state minimum wage for the purpose of premium calculation. However, when applying the state minimum wage the maximum number of hours assessed for a month will be one hundred sixty.

(3) Special trucking industry rules. The following subsection shall apply to all trucking industry employers as applicable.

(a) Insurance liability. Every trucking industry employer operating as an intrastate carrier or a combined intrastate and interstate carrier must insure their workers' compensation insurance liability through the Washington state fund or be self-insured with the state of Washington.

Washington employers operating exclusively in interstate or foreign commerce or any combination of interstate and foreign commerce must insure their workers' compensation insurance liability for their Washington employees with the Washington state fund, be self-insured with the state of Washington, or provide workers' compensation insurance for their Washington employees under the laws of another state when such other state law provides for such coverage.

Interstate or foreign commerce trucking employers who insure their workers' compensation insurance liability under the laws of another state must provide the department with copies of their current policy and applicable endorsements upon request.

Employers who elect to insure their workers' compensation insurance liability under the laws of another state and who fail to provide updated policy information when requested to do so will be declared an unregistered employer and subject to all the penalties contained in Title 51 RCW.

(b) Reporting. Trucking industry employers insuring their workers' compensation insurance liability with the Washington state fund shall keep and preserve all original time records/books including supporting information from drivers' logs for a period of three calendar years plus three months.

Employers are to report actual hours worked, including time spent loading and unloading trucks, for each driver in their employ. For purposes of this section, actual hours worked does not include time spent during lunch or rest periods or overnight lodging.

Failure of employers to keep accurate records of actual hours worked by their employees will result in the department estimating work hours by dividing gross payroll wages by the state minimum wage for each worker for whom records were not kept. However, in no case will the estimated or actual hours to be reported exceed five hundred twenty hours per calendar quarter for each worker.

(c) Exclusions. Trucking industry employers meeting all of the following conditions are exempted from mandatory coverage.

(i) Must be engaged exclusively in interstate or foreign commerce.

(ii) Must have elected to cover their Washington workers on a voluntary basis under the Washington state fund and must have elected such coverage in writing on forms provided by the department.

(iii) After having elected coverage, withdrew such coverage in writing to the department on or before January 2, 1987.

If all the conditions set forth in (i), (ii), and (iii) of this subsection have not been met, employers must insure their workers' compensation insurance liability with the Washington state fund or under the laws of another state.

(d) Definitions. For purposes of interpretation of RCW 51.12.095(1) and administration of this section, the following terms shall have the meanings given below:

(i) "Agents" means individuals hired to perform services for the interstate or foreign commerce carrier that are intended to be carried out by the individual and not contracted out to others but does not include owner operators as defined in RCW 51.12.095(1).

(ii) "Contacts" means locations at which freight, merchandise, or goods are picked up or dropped off within the boundaries of this state.

(iii) "Doing business" means having any terminals, agents or contacts within the boundaries of this state.

(iv) "Employees" means the same as the term "worker" as contained in RCW 51.08.180.

(v) "Terminals" means a physical location wherein the business activities (operations) of the trucking company are conducted on a routine basis. Terminals will generally include loading or shipping docks, warehouse space, dispatch offices and may also include administrative offices.

(vi) "Washington" shall be used to limit the scope of the term "employees." When used with the term "employees" it will require the following test for benefit purposes (all conditions must be met).

The individual must be hired in Washington or must have been transferred to Washington; and
The individual must perform some work in Washington (i.e., driving, loading, or unloading trucks).
(4) Forest, range, or timber land services -- Industry rule. Washington law (RCW 51.48.030) requires every employer to make, keep, and preserve records which are adequate to facilitate the determination of premiums (taxes) due to the state for workers' compensation insurance coverage for their covered workers. In the administration of Title 51 RCW, and as it pertains to the forest, range, or timber land services industry, the department of labor and industries has deemed the records and information required in the various subsections of this section to be essential in the determination of premiums (taxes) due to the state fund. The records so specified and required, shall be provided at the time of audit to any representative of the department who has requested them.

Failure to produce these required records within thirty days of the request, or within an agreed upon time period, shall constitute noncompliance of this rule and RCW 51.48.030 and 51.48.040. Employers whose premium computations are made by the department in accordance with (d) of this subsection are barred from questioning, in an appeal before the board of industrial insurance appeals or the courts, the correctness of any assessment by the department on any period for which such records have not been kept, preserved, or produced for inspection as provided by law.

(a) General definitions. For purpose of interpretation of this section, the following terms shall have the meanings given below:

(i) "Actual hours worked" means each workers' composite work period beginning with the starting time of day that the employees' work day commenced, and includes the entire work period, excluding any nonpaid lunch period, and ending with the quitting time each day work was performed by the employee.

(ii) "Work day" shall mean any consecutive twenty-four-hour period.

(b) Employment records. Every employer shall with respect to each worker, make, keep, and preserve original records containing all of the following information for three full calendar years following the calendar year in which the employment occurred:

(i) The name of each worker;

(ii) The Social Security number of each worker;

(iii) The beginning date of employment for each worker and, if applicable, the separation date of employment for each such worker;

(iv) The basis upon which wages are paid to each worker;

(v) The number of units earned or produced for each worker paid on a piece-work basis;

(vi) The risk classification(s) applicable to each worker;

(vii) The number of actual hours worked by each worker, unless another basis of computing hours worked is prescribed in WAC 296-17-31021. For purposes of chapter 296-17 WAC, this record must clearly show, by work day, the time of day the employee commenced work, and the time of day work ended;

(viii) A summary time record for each worker showing the calendar day or days of the week work was performed and the actual number of hours worked each work day;

(ix) In the event a single worker's time is divided between two or more risk classifications, the summary contained in (b)(viii) of this subsection shall be further broken down to show the actual hours worked in each risk classification for the worker;

(x) The workers' total gross pay period earnings;

(xi) The specific sums withheld from the earnings of each worker, and the purpose of each sum withheld;

(xii) The net pay earned by each such worker.

(c) Business, financial records, and record retention. Every employer is required to keep and preserve all original time records completed by their employees for a three-year period. The three-year period is specified in WAC 296-17-352 as the composite period from the date any such premium became due.

Employers who pay their workers by check are required to keep and preserve a record of all check registers and cancelled checks; and employers who pay their workers by cash are required to keep and preserve records of these cash transactions which provide a detailed record of wages paid to each worker.

(d) Recordkeeping - estimated premium computation. Any employer required by this section to make, keep, and preserve records containing the information as specified in (b) and (c) of this subsection, who fails to make, keep, and preserve such records, shall have premiums calculated as follows:

(i) Estimated worker hours shall be computed by dividing the gross wages of each worker for whom records were not maintained and preserved, by the state's minimum wage, in effect at the time the wages were paid or would have been paid. However, the maximum number of hours to be assessed under this provision will not exceed five hundred twenty hours for each worker, per quarter for the first audited period. Estimated worker hours computed on all subsequent audits of the same employer that disclose a continued failure to make, keep, or preserve the required payroll and employment records shall be subject to a maximum of seven hundred eighty hours for each worker, per quarter.

(ii) In the event an employer also has failed to make, keep, and preserve the records containing payroll information and wages paid to each worker, estimated average wages for each worker for whom a payroll and wage record was not maintained will be determined as follows: The employer's total gross income for the audit period (earned, received, or anticipated) shall be reduced by thirty-five percent to arrive at "total estimated wages." Total estimated wages will then be divided by the number of employees for whom a record of actual hours worked was not made, kept, or preserved to arrive at an "estimated average wage" per worker. Estimated hours for each worker will then be computed by dividing the estimated average wage by the state's minimum wage in effect at the time the wages were paid or would have been paid as described in (d)(i) of this subsection.

(e) Reporting requirements and premium payments.

(i) Every employer who is awarded a forest, range, or timber land services contract must report the contract to the department promptly when it is awarded, and prior to any work being commenced, except as provided in (e)(iii) of this subsection. Employers reporting under the provisions of (e)(iii) of this subsection shall submit the informational report with their quarterly report of premium. The report shall include the following information:

(I) The employers' unified business identification account number (UBI).

(II) Identification of the landowner, firm, or primary contractor who awarded the contract, including the name, address, and phone number of a contact person.

(III) The total contract award.

(IV) Description of the forest, range, or timber land services work to be performed under terms of the contract.

(V) Physical location/site where the work will be performed including legal description.

(VI) Number of acres covered by the contract.

(VII) Dates during which the work will be performed.

(VIII) Estimated payroll and hours to be worked by employees in performance of the contract.

(ii) Upon completion of every contract issued by a landowner or firm that exceeds a total of ten thousand dollars, the contractor primarily responsible for the overall project shall submit in addition to the required informational report described in (e)(i) of this subsection, report the payroll and hours worked under the contract, and payment for required industrial insurance premiums. In the event that the contracted work is not completed within a calendar quarter, interim quarterly reports and premium payments are required for each contract for all work done during the calendar quarter. The first such report and payment is due at the end of the first calendar quarter in which the contract work is begun. Additional interim reports and payments will be submitted each quarter thereafter until the contract is completed. This will be consistent with the quarterly reporting cycle used by other employers. Premiums for a calendar quarter, whether reported or not, shall become due and delinquent on the day immediately following the last day of the month following the calendar quarter.

(iii) A contractor may group contracts issued by a landowner, firm, or other contractor that total less than ten thousand dollars together and submit a combined quarterly report of hours, payroll, and the required premium payment in the same manner and periods as nonforestation, range, or timber land services employers.

(f) Out-of-state employers. Forest, range, or timber land services contractors domiciled outside of Washington state must report on a contract basis regardless of contract size for all forest, range, or timber land services work done in Washington state. Out-of-state employers will not be permitted to have an active Washington state industrial insurance account for reporting forest, range, or timber land services work in the absence of an active Washington forest, range, or timber land services contract.

(g) Work done by subcontract. Any firm primarily responsible for work to be performed under the terms of a forest, range, or timber land services contract, that subcontracts out any work under a forest, range, or timber land services contract must send written notification to the department prior to any work being done by the subcontractor. This notification must include the name, address, Social Security number, farm labor contractor number, (UBI) of each subcontractor, and the amount and description of contract work to be done by subcontract.

(h) Forest, range, or timber land services contract release - verification of hours, payroll, and premium. The department may verify reporting of contractors by way of an on-site visit to an employers' work site. This on-site visit may include close monitoring of employees and employee work hours. Upon receipt of a premium report for a finished contract, the department may conduct an audit of the firm's payroll, employment, and financial records to validate reporting. The department will notify the contractor, and the entity that awarded the contract, of the status of the contractors' account immediately after verification. The landowner, firm, or contractors' premium liability will not be released until the final report for the contract from the primary contractor and any subcontractors has been received and verified by the department.

(i) Premium liability - work done by contract. Washington law (RCW 51.12.070) places the responsibility for industrial insurance premium payments primarily and directly upon the person, firm, or corporation who lets a contract for all covered employment involved in the fulfillment of the contract terms. Any such person, firm, or corporation letting a contract is authorized to collect from the contractor the full amount payable in premiums. The contractor is in turn authorized to collect premiums from any subcontractor they may employ his or her proportionate amount of the premium payment.

To eliminate premium liability for work done by contract permitted by Title 51 RCW, any person, firm, or corporation who lets a contract for forest, range, or timber land services work must submit a copy of the contract they have let to the department and verify that all premiums due under the contract have been paid.

Each contract submitted to the department must include within its body, or on a separate addendum, all of the following items:

(I) The name of the contractor who has been engaged to perform the work;

(II) The contractor's UBI number;

(III) The contractor's farm labor contractor number;

(IV) The total contract award;

(V) The date the work is to be commenced; a description of the work to be performed including any pertinent acreage information;

(VI) Location where the work is to be performed;

(VII) A contact name and phone number of the person, firm, or corporation who let the contract;

(VIII) The total estimated wages to be paid by the contractor and any subcontractors;

(IX) The amount to be subcontracted out if such subcontracting is permitted under the terms of the contract;

(X) The total estimated number of worker hours anticipated by the contractor and his/her subcontractors in the fulfillment of the contract terms;

(j) Reports to be mailed to the department. All contracts, reports, and information required by this section are to be sent to:


The Department of Labor and Industries

Reforestation Team 8

P.O. Box 44168

Tumwater, Washington 98504-4168


(k) Rule applicability. If any portion of this section is declared invalid, only that portion is repealed. The balance of the section shall remain in effect.

(5) Logging and/or tree thinning -- Mechanized operations -- Industry rule. The following subsection shall apply to all employers assigned to report worker hours in risk classification 5005, WAC 296-17-66003.

(a) Every employer having operations subject to risk classification 5005 "logging and/or tree thinning - mechanized operations" shall have their operations surveyed by labor and industries insurance services staff prior to the assignment of risk classification 5005 to their account. Annual surveys may be required after the initial survey to retain the risk classification assignment.

(b) Every employer as a prerequisite of being assigned risk classification 5005 and having exposure (work hours) which is reportable under other risk classifications assigned to the employer shall be required to establish a separate subaccount for the purpose of reporting exposure (work hours) and paying premiums under this risk classification (5005). Except as otherwise provided for in this rule, only exposure (work hours) applicable to work covered by risk classification 5005 shall be reported in this subaccount. In the event that the employer's only other reportable exposure (work hours) is subject to one of the standard exception risk classifications, or the shop or yard risk classification then all exposure (work hours) will be reported under a single main account.

(c) Every employer assigned to report exposure (work hours) in risk classification 5005 shall supply an addendum report with their quarterly premium report which lists the name of each employee reported under this classification during the quarter, the Social Security number of such worker, the piece or pieces of equipment the employee operated during the quarter, the number of hours worked by the employee during the quarter, and the wages earned by the employee during the quarter.

(6) Special drywall industry rule.

(((a) Why have we changed the way you pay premiums? Under Washington law (RCW 51.16.035), we are given the authority to establish how workers' compensation insurance rates are computed. For most industries, workers' compensation insurance rates are based on hours worked by employees. While the worker hour system works well for most industries, this method of paying premium can be unfair when a large segment of workers within an industry are not paid an hourly wage. The drywall industry is one in which many workers are paid on the basis of material installed and/or finished, (piece work), not the hours they work. 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 0540, 0541, 0550, and 0551 is based on material (square feet).

(b) How can I qualify for a discounted rate? For each drywall industry classification, we have established a second classification covering the same activity. The second classification carries a discounted rate. To qualify for a discounted classification and rate you are required to meet all of the following conditions:

(i) Prior to the end of the quarter that you want the discounted classifications and rates to be applied to your business, you (an owner/officer) must attend two workshops that we offer. For example, if you want the discounted classifications and rates to apply to your business for the third calendar quarter (July 1 through September 30), you (an owner/officer) must attend the two workshops by September 30. One workshop covers claims and risk management practices; the other workshop covers premium reporting and recordkeeping. The two workshops may be offered together or separately. Be sure to sign in so that you receive credit for attending the workshops.

(ii) You (an owner/officer) must provide us with a signed and completed voluntary release of information form that we may provide to you at the workshops. If we audit your account we will use this release form to obtain material and supply/purchase sales records from the material supply dealer(s) you use. This will aid us as we verify the information you supply us on your premium and supplemental reports. If we need to verify the information that you supplied us, we will send you written notice before we contact your material supply dealer(s). We must receive this release form prior to the end of the quarter in which you want the discounted classifications and rates to become effective. For example, if you want the discounted classifications and rates to apply to your business for the third calendar quarter (July 1 through September 30), we must receive your signed and completed release of information form by September 30. You can complete the voluntary release form at the workshop and give it to our representative at the workshop or mail it to:


Labor and Industries

Employer Services - Drywall Manager

P.O. Box 44166

Olympia, Washington 98504-4166


(iii) You must 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, we will not allow you to report in the discounted classifications until your premium obligations have been paid. This requirement applies to any classification assigned to your business and for any exposure (hours, square feet, etc.,) which occurs. Businesses requesting the use of the discounted classifications while in field audit status shall not be assigned the discounted classifications and rates until the audit process is complete and all criteria for this rule have been met.

(iv) You must 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. This report is to be attached to and submitted with your quarterly premium report.

(v) For any work which you subcontract to others, you must maintain the records described in WAC 296-17-31013 which requires you to keep certain information about the subcontractors you use and materials you may have supplied to the subcontractors.

(vi) You must 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).

(c) Can I be disqualified from using the discounted rates? Yes, as opposed to failing to qualify because you did not meet the conditions of (b) of this subsection, your business will be disqualified from using the discounted premium rates if:

You do not file premium reports on time;
You fail to pay premiums on time;
You under report or misclassify the work performed by your employees; or
You fail to meet any other condition set forth in this rule.
(d) How long will I be disqualified from using the discounted classifications? If the drywall underwriter discovers your business has failed to meet the conditions as required in this rule, your business will need to comply to retain using the discounted classifications. If your business does not comply timely, your business may be referred for an audit. If, as a result of an audit, your business is in noncompliance, your business will be disqualified from using the discounted classifications for three years (thirty-six months) from the period of last noncompliance. If your business does comply, we will schedule your business to be audited over the next several years to ensure continued compliance.

(e) 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.

(f) If I make a mistake in how I reported to you, should I correct the error? Yes, you should send in a revised report(s) with an explanation of the error you are trying to correct to the drywall underwriter. 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.

(g) 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. 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 do not post an equivalent bond, you will not be permitted to use any of the discounted classifications.

(h) 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.

(i) 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, the owner, installed and/or finished at the job, project, site or location; the hours it took you to install and/or finish the material you are claiming deduction for; the total material installed and/or finished by subcontractors (including the subcontractor's legal name and Unified Business Identifier (UBI) at the job, project, site or location); 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 for whom you wish to claim a deduction.))

(a) What is the unit of exposure for drywall reporting? Your premiums for workers installing and finishing drywall (reportable in risk classifications 0540, 0541, 0550, and 0551) are based on the amount of material installed and finished, not the number of hours worked.

The amount of material installed equals the amount of material purchased or taken from inventory for a job. No deduction can be made for material scrapped (debris). A deduction is allowed for material returned to the supplier or inventory.

The amount of material finished for a job equals the amount of material installed. No deduction can be made for a portion of the job that is not finished (base layer of double-board application or unfinished rooms).

Example: Drywall installation firm purchases 96 4' x 8' sheets of material for a job which includes some double-wall installation. The firm hangs all or parts of 92 sheets, and returns 4 sheets to the supplier for credit. Drywall finishing firm tapes, primes and textures the same job. Both firms should report 2,944 square feet (4 x 8 x 92) for the job.

(b) I do some of the work myself. Can I deduct material I as an owner install or finish? Yes. Owners (sole proprietors, partners, and corporate officers) who have not elected coverage may deduct material they install or finish.

When you as an owner install (including scrap) or finish (including tape and prime or texture) only part of a job, you may deduct an amount of material proportional to the time you worked on the job, considering the total time you and your workers spent on the job.

To deduct material installed or finished by owners, you must report to the department by job, project, site or location the amount of material you are deducting for this reason. You must file this report at the same time you file your quarterly report:

Total owners hours (owners hours + workers hours) =

% of owner discount.

% of owner discount x (total footage of job − subcontracted footage, if any) = Total owner deduction of footage.


(c) Can I deduct material installed or finished by subcontractors? You may deduct material installed or taped by subcontractors you are not required to report as your workers. You may not deduct for material only scrapped or primed and textured by subcontractors.

To deduct material installed or taped by subcontractors, you must report to the department by job, project, site or location the amount of material being deducted. You must file this report at the same time you file your quarterly report. You must have and maintain business records that support the number of square feet worked by the subcontractor.

(d) I understand there are discounted rates available for the drywall industry. How do I qualify for them? To qualify for discounted drywall installation and finishing rates, you must:

(i) Have an owner attend two workshops the department offers (one workshop covers claims and risk management, the other covers premium reporting and recordkeeping);

(ii) Provide the department with a voluntary release authorizing the department to contact material suppliers directly about the firm's purchases;

(iii) Have and keep all your industrial insurance accounts in good standing (including the accounts of other businesses in which you have an ownership interest), which includes fully and accurately reporting and paying premiums as they come due, including reporting material deducted as owner or subcontractor work;

(iv) Provide the department with a supplemental report (filed with the firm's quarterly report) showing by employee the employee's name, the wages paid them during the quarter, how they are paid (piece rate, hourly, etc.), their rate of pay, and what work they performed (installation, scrapping, taping, priming/texturing); and

(v) Maintain accurate records about work you subcontracted to others and materials provided to subcontractors (as required by WAC 296-17-31013), and about payroll and employment (as required by WAC 296-17-35201).

The discounted rates will be in effect beginning with the first quarter your business meets all the requirements for the discounted rates.

Note: If you are being audited by the department while your application for the discounted classifications is pending, the department will not make a final decision regarding your rates until the audit is completed.
(e) Can I be disqualified from using the discounted rates? Yes. You can be disqualified from using the discounted rates for three years if you:

(i) Do not file all reports, including supplemental reports, when due;

(ii) Do not pay premiums on time;

(iii) Underreport the amount of premium due; or

(iv) Fail to maintain the requirements for qualifying for the discounted rates.

Disqualification takes effect when a criterion for disqualification exists.

Example: A field audit in 2002 reveals that the drywall installation firm underreported the amount of premium due in the second quarter of 2001. The firm will be disqualified from the discounted rates beginning with the second quarter of 2001, and the premiums it owed for that quarter and subsequent quarters for three years will be calculated using the nondiscounted rates.

If the drywall underwriter learns that your business has failed to meet the conditions as required in this rule, your business will need to comply to retain using the discounted classifications. If your business does not comply promptly, the drywall underwriter may refer your business for an audit.

If, as a result of an audit, the department determines your business has not complied with the conditions in this rule, your business will be disqualified from using the discounted classifications for three years (thirty-six months) from the period of last noncompliance.

(f) If I discover I have made an error in reporting or paying premium, what should I do? If you discover you have made a mistake in reporting or paying premium, you should contact the department and correct the mistake. Firms not being audited by the department who find errors in their reporting and paying premiums, and who voluntarily report their errors and pay any required premiums, penalties and interest promptly, will not be disqualified from using the discounted rates unless the department determines they acted in bad faith.

[Statutory Authority: RCW 51.16.035. 01-23-059, 296-17-35203, filed 11/20/01, effective 1/1/02; 99-18-068, 296-17-35203, filed 8/31/99, effective 10/1/99; 98-18-042, 296-17-35203, filed 8/28/98, effective 10/1/98.]


AMENDATORY SECTION(Amending WSR 01-23-059, filed 11/20/01, effective 1/1/02)

WAC 296-17-52140   Classification 0540.  


0540-00 Wallboard installation, including scrapping - discounted rate (to be assigned only by the drywall underwriter)


Applies to contractors engaged in the installation or repair of wallboard. This classification includes the installation of wallboard, drywall, or sheetrock in all types of residential or commercial buildings or structures. The process consists of cutting wallboard with a utility knife, hacksaw, or power saw to the desired size and then butting material into place and nailing or screw fastening to wood or metal wall studs. Electrical box, window, or door openings are cut out where needed. Installation may require the use of scaffolding, ladders, specialty lifts, or stilts when working at heights, including the use of T holders or hydraulic lifts to hold material being installed on ceilings. This classification also includes wallboard scrapping (picking up and discarding unused portions of wallboard remnants or scraps) at the construction site when performed by employees of the wallboard contractor.

This classification excludes delivery of materials to the construction site by material dealer employees which is to be reported separately in the applicable delivery classification; delivery and stocking of materials to the construction site when performed by employees of the wallboard contractor which is to be reported separately in classification 1101; wallboard taping (including priming and texturing when performed by employees of the wallboard contractor) which is to be reported separately in classification 0541 or 0551; wallboard scrapping by nonwallboard contractor employees which is to be reported separately in the applicable construction debris cleanup classification; plastering, stuccoing or lathing work which is to be reported separately in classification 0303; and the framing of nonbearing walls when performed by the drywall contractor which is to be reported separately in classification 0516.

((Special note: The basis of premium for this classification is material installed (square feet). The amount used to determine premium calculation for material installed shall be the same amount used for premium calculation of material finished for use in classification 0541 or 0551. The amount of wallboard purchased for each job, project, site or location shall be equal to the amount of material installed or finished. For contractors to be assigned and continue to report in this classification, their account must remain in good standing and conform to the conditions specified in the special drywall industry rule.))

[Statutory Authority: RCW 51.16.035. 01-23-059, 296-17-52140, filed 11/20/01, effective 1/1/02.]


AMENDATORY SECTION(Amending WSR 01-23-059, filed 11/20/01, effective 1/1/02)

WAC 296-17-52141   Classification 0541.  


0541-00 Wallboard taping, including texturing and priming -discounted rate (to be assigned only by the drywall underwriter)


Applies to contractors engaged in taping wallboard in residential or commercial buildings or structures. The process of taping occurs after wallboard, drywall, or sheetrock has been installed and involves taping the seams, and spreading joint compound over the seams and nail or screw heads. When dry, the seams are sanded to remove any rough edges. This classification includes the following activities when performed by employees of a wallboard contractor and part of the taping process which includes wallboard texturing (a putty-like material that is sprayed over the prepared wallboard in a clump-like application and smoothed with a trowel or putty knife), and wallboard priming (the application of an undercoating that may be applied either directly to the wallboard or after it has been textured). This classification also includes incidental painting when performed by employees of a wallboard contractor and part of the taping process.

This classification excludes wallboard installation which is to be reported separately in classification 0540 or 0550; wallboard priming and texturing not performed by employees of the wallboard contractor and part of the taping process which is to be reported separately in classification 0521; interior painting which is to be reported separately in classification 0521; and wallboard scrapping by nonmaterial dealer employees which is to be reported separately in classification 0540 or 0550.

((Special note: The basis of premium for this classification is material finished (square feet). The amount used to determine premium calculation for material finished shall be the same amount used for premium calculation of material installed for use in classification 0540 or 0550. The amount of wallboard purchased for each job, project, site or location shall be equal to the amount of material installed or finished. For contractors to be assigned, and continue to report in this classification, their account must remain in good standing and conform to the conditions specified in the special drywall industry rule.))

[Statutory Authority: RCW 51.16.035. 01-23-059, 296-17-52141, filed 11/20/01, effective 1/1/02.]


AMENDATORY SECTION(Amending WSR 01-23-059, filed 11/20/01, effective 1/1/02)

WAC 296-17-52150   Classification 0550.  


0550-00 Wallboard installation, including scrapping -nondiscounted rate (to be assigned only by the drywall underwriter)


Applies to contractors engaged in the installation or repair of wallboard. This classification includes the installation of wallboard, drywall, or sheetrock in all types of residential or commercial buildings or structures. The process consists of cutting wallboard with a utility knife, hacksaw, or power saw to the desired size and then butting material into place and nailing or screw fastening to wood or metal wall studs. Electrical box, window, or door openings are cut out where needed. Installation may require the use of scaffolding, ladders, specialty lifts, or stilts when working at heights, including the use of T holders or hydraulic lifts to hold material being installed on ceilings. This classification also includes wallboard scrapping (picking up and discarding unused portions of wallboard remnants or scraps) at the construction site when performed by employees of the wallboard contractor.

This classification excludes delivery of materials to the construction site by material dealer employees which is to be reported separately in the applicable delivery classification; delivery and stocking of materials to the construction site when performed by employees of the wallboard contractor which is to be reported separately in classification 1101; wallboard taping (including priming and texturing when performed by employees of the wallboard contractor) which is to be reported separately in classification 0541 or 0551; wallboard scrapping by nonwallboard contractor employees which is to be reported separately in the applicable construction debris cleanup classification; plastering, stuccoing or lathing work which is to be reported separately in classification 0303; and the framing of nonbearing walls when performed by the drywall contractor which is to be reported separately in classification 0516.

((Special note: The basis of premium for this classification is material installed (square feet). The amount used to determine premium calculation for material installed shall be the same amount used for premium calculation of material finished for use in classification 0541 or 0551. The amount of wallboard purchased for each job, project, site or location shall be equal to the amount of material installed or finished. For contractors to be assigned and continue to report in this classification, their account must remain in good standing and conform to the conditions specified in the special drywall industry rule.))

[Statutory Authority: RCW 51.16.035. 01-23-059, 296-17-52150, filed 11/20/01, effective 1/1/02.]


AMENDATORY SECTION(Amending WSR 01-23-059, filed 11/20/01, effective 1/1/02)

WAC 296-17-52151   Classification 0551.  


0551-00 Wallboard taping, including texturing and priming -nondiscounted rate (to be assigned only by the drywall underwriter)


Applies to contractors engaged in taping wallboard in residential or commercial buildings or structures. The process of taping occurs after wallboard, drywall, or sheetrock has been installed and involves taping the seams, and spreading joint compound over the seams and nail or screw heads. When dry, the seams are sanded to remove any rough edges. This classification includes the following activities when performed by employees of a wallboard contractor and part of the taping process which includes wallboard texturing (a putty-like material that is sprayed over the prepared wallboard in a clump-like application and smoothed with a trowel or putty knife), and wallboard priming (the application of an undercoating that may be applied either directly to the wallboard or after it has been textured). This classification also includes incidental painting when performed by employees of a wallboard contractor and part of the taping process.

This classification excludes wallboard installation which is to be reported separately in classification 0540 or 0550; wallboard priming and texturing not performed by employees of the wallboard contractor and part of the taping process which is to be reported separately in classification 0521; interior painting which is to be reported separately in classification 0521; and wallboard scrapping by nonmaterial dealer employees which is to be reported separately in classification 0540 or 0550.

((Special note: The basis of premium for this classification is material finished (square feet). The amount used to determine premium calculation for material finished shall be the same amount used for premium calculation of material installed for use in classification 0540 or 0550. The amount of wallboard purchased for each job, project, site or location shall be equal to the amount of material installed or finished. For contractors to be assigned, and continue to report in this classification, their account must remain in good standing and conform to the conditions specified in the special drywall industry rule.))

[Statutory Authority: RCW 51.16.035. 01-23-059, 296-17-52151, filed 11/20/01, effective 1/1/02.]

Washington State Code Reviser's Office