2017 and 2018 Changes to the California Workers Compensation Uniform Statistical Reporting Plan 1995 January 2018

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1 W o r k e r s C o m p e n s a t i o n I n s u r a n c e R a t i n g B u r e a u o f C a l i f o r n i a 2017 and 2018 Changes to the California Workers Compensation Uniform Statistical Reporting Plan 1995 January 2018 Brian Gray Director, Classification Administration and Education Paul Kim Director, Classification and Test Audit Notice The information provided in this Presentation was developed by the Workers Compensation Insurance Rating Bureau of California (WCIRB) solely for the purpose of discussion during this Presentation. The WCIRB shall not be liable for any damages, of any kind, whether direct, indirect, incidental, punitive or consequential, arising from the use, inability to use, or reliance upon information provided in this Presentation Workers Compensation Insurance Rating Bureau of California. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, without limitation, photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Workers Compensation Insurance Rating Bureau of California (WCIRB), unless such copying is expressly permitted by federal copyright law. No copyright is claimed in the text of statutes and regulations quoted within this work. Workers Compensation Insurance Rating Bureau of California, WCIRB, WCIRB California, WCIRB Connect, WCIRB Inquiry, WCIRB CompEssentials, X-Mod Direct, escad and the WCIRB California logo (WCIRB Marks) are registered trademarks or service marks of the WCIRB. WCIRB Marks may not be displayed or used in any manner without the WCIRB s prior written permission. Any permitted copying of this work must maintain any and all trademarks and/or service marks on all copies. To seek permission to use any of the WCIRB Marks or any copyrighted material, please contact the WCIRB at customerservice@wcirb.com.a

2 Agenda New WCIRB Classification Inspection Report 2017 USRP Changes 2018 USRP Changes Questions 1

3 New WCIRB Classification Inspection Report

4 New WCIRB Classification Inspection Report

5 2017 USRP Changes

6 2017 Changes Clarifications Classifications Over 134 classifications were revised for 2017 as part of the ongoing USRP enhancement project Scope No change to intended scope of operation Why? Consistency, clarification and codification of established procedures Resources Amended classifications are summarized in a Quick Reference Guide and the Memorandum in first pages of the USRP, available at wcirb.com 5

7 2017 Changes New Classifications/Phraseologies Classification 5183(3), Heating and Air Conditioning Equipment installation, service and repair shop and outside employees whose regular hourly wage does not equal or exceed $26.00 per hour N.O.C. Classification 5187(3), Heating and Air Conditioning Equipment installation, service and repair shop and outside employees whose regular hourly wage equals or exceeds $26.00 per hour N.O.C. Key Change: New dual wage level suffix classification for HVAC contractors. Scope includes installation, service and repair of heating and air conditioning equipment, provided no ductwork installation is performed by the employer at the same job or location. Includes swap out replacement of existing heating and air conditioning systems. Example: My A/C doesn t work this company comes out to repair. 6

8 2017 Changes New Classifications/Phraseologies (continued) Classification 5538(2), Heating and Air Conditioning Ductwork installation or repair including shop including installation of furnaces or air conditioning equipment employees whose regular hourly wage does not equal or exceed $27.00 per hour N.O.C. Classification 5542(2), Heating and Air Conditioning Ductwork installation or repair including shop including installation of furnaces or air conditioning equipment employees whose regular hourly wage equals or exceeds $27.00 per hour N.O.C. Key Change: New wage level suffix classification for HVAC contractors. Scope includes installation or repair of ductwork and associated heating and air conditioning systems. Ductwork of any material; note that sheet metal is not specified. Example: Need new ductwork in a building for new construction/remodeling, or replacement of damaged ductwork. 7

9 2017 Changes New Classifications/Phraseologies (continued) Classification 5610, Contractors construction or erection all construction subcontracted all other employees This classification applies to all employees other than executive level supervisors on jobs where the employer subcontracts all operations to licensed subcontractors. This classification applies to operations, including but not limited to job site cleaning and debris removal and post-construction warranty repair operations. Otherwise, such employees are miscellaneous employees and shall be classified in accordance with Part 3, Section IV, Rule 2c, Miscellaneous Employees (Construction or Erection). Employers that perform construction job site cleaning for other concerns on a fee basis shall be classified as 9008, Janitorial Services by contractors. 8

10 2017 Changes New Classifications/Phraseologies (continued) Classification 5610, Contractors construction or erection all construction subcontracted all other employees Key Change: New classification that applies to job site cleaning, debris removal, security, traffic control and post-construction warranty repair operations for contractors who subcontract all construction work. Used in conjunction with Classification 5606, Contractors construction or erection executive level supervisors no direct supervision; division of a single employee s payroll with any other classification is not permitted Use in place of 9015(1), Building Operation, when assigning 5606 due to subcontracted operations. 9

11 2017 Changes New Classifications/Phraseologies (continued) Property Management Classifications What is the most common classification issue when classifying property management supervisors that manage multiple property types? Pre-2017 answer: Property managers who manage apartments or commercial properties and single family homes. In many cases unable to use Classification 8740 due to the requirement for an on-site manager phraseologies for all of the 8740 classifications were amended for consistency across property types Approach is similar to that historically applied to commercial properties 2017 changes have greatly reduced confusion associated with 8740 assignments 10

12 2017 Changes Part 3, Standard Classification System The minimum payroll requirements were removed for these building or property management/operation classifications: 9007, Apartment or Condominium Complex Operation for Seniors 9010, Mobile Home Park Operation all other employees 9011, Apartment or Condominium Complex Operation N.O.C. 9015, Building Operation N.O.C. 11

13 2017 Changes New Classifications/Phraseologies Classification 9011(2), Commercial and Residential Mixed-Use Building Operation not Homeowners Associations all other employees including resident employees and resident Clerical Office Employees When lodging is provided by the employer, the total remuneration shall include the market value of such lodging to the employee. Key Change: New suffix classification applies to employers that manage and operate commercial and residential mixed-use multi-unit properties comprised of one or more mixed-use multi-unit buildings with four or more units per building. Includes property managers engaged in the direct supervision of maintenance employees. Non-residing rental agents engaged exclusively in the rental or leasing of property to clients shall be separately classified as 8741, Real Estate Agencies, provided separate employees are retained to manage the property. 12

14 2017 Changes New Classifications/Phraseologies (continued) Health and Human Services Residential Facilities Classifications consolidated, phraseologies updated Classifications amended to specifically include administrators, supervisors, receptionists and employees providing facility tours Dementia care is classified based on level of care provided 8829, 9070 and 8851 shall be separately classified; no need to apply Multiple Enterprises requirements aging in place model At facilities with multiple classifications, employees common to all operations, (food services, laundry, maintenance, security and miscellaneous employees) assigned to the classification describing the level of care designated for the largest number of beds per the facility license 13

15 2017 Changes HHS Residential Facilities Example Classification 8829(1), Skilled Nursing Facilities including supervisors and receptionists Skilled nursing facilities engage in the provision of skilled nursing care and supportive care to patients whose primary need is the availability of skilled nursing care on an extended basis. These facilities provide 24-hour inpatient care, including medical, nursing, dietary and pharmaceutical services. This classification also applies to facilities providing skilled nursing care to residents with Alzheimer s disease, dementia, mild cognitive impairment and similar disorders. This classification includes certified administrators, including but not limited to Nursing Home Administrators, Residential Care Facility for the Elderly Administrators, Adult Residential Facility Administrators and Qualified Intellectual Disabilities Professionals. This classification also includes employees who provide tours of the facility, including but not limited to tours for marketing, admission or inspection purposes. 14

16 2017 Changes HHS Residential Facilities Example (continued) Classification 8829(1), Skilled Nursing Facilities including supervisors and receptionists This classification also applies to facilities engaged in the provision of skilled nursing care for mentally ill individuals whose primary need is the availability of skilled nursing care on an extended basis. Psychiatric Health Facilities providing acute, short-term, inpatient treatment to mentally ill individuals shall be classified as 9043, Hospitals. Employees at the same location who provide assisted care services to residents who do not require skilled nursing care but require assistance with daily living, including but not limited to assisting residents with dressing, eating, personal hygiene and taking medications shall be separately classified as 9070(1), Residential Care Facilities for the Elderly, or 9070(3), Residential Care Facilities for Adults. 15

17 2017 Changes HHS Residential Facilities Example (continued) Classification 8829(1), Skilled Nursing Facilities including supervisors and receptionists Employees at the same location who do not provide any assisted care services but provide congregate living services to residents who do not require care and supervision shall be separately classified as 8851, Congregate Living Facilities for the Elderly. When the skilled nursing facility also has employees at the same location who are classified as 8851, Congregate Living Facilities for the Elderly, 9070(1), Residential Care Facilities for the Elderly, and/or 9070(3), Residential Care Facilities for Adults, employees common to all operations, including but not limited to food services, laundry, maintenance, security and miscellaneous employees shall be assigned to the classification describing the level of care designated for the largest number of beds per the facility license. 16

18 2017 Changes Rule Amendments Section IV, Special Industry Classification Procedures, Rule 2, Construction or Erection Work Amended to allow assignment of Classification 9015 for handyman style repairs where no contractor s license is required Section IV, Special Industry Classification Procedures Added Rule 9 for Property Management/Operation Industry Group (page 35) Section V, Payroll Remuneration, Rule 1, Payroll Remuneration Defined term market value for lodging 17

19 2017 Changes Payroll Limitations Minimum and maximum payroll for executives officers, partners, individual employers, & LLC members & managers Minimum $48,100 (increased from $45,500) Maximum $122,200 (increased from $117,000) Payroll limitations for entertainers and athletic teams Classifications 9610, 7610, 9151, 9156 and 9181 Maximum increased to $122,200 (from $117,000) Payroll minimum for classification 7365, Taxicab Operations all employees Minimum per cab increased to $34,100 (from $32,700) 18

20 2018 USRP Changes

21 2018 Changes Clarifications Classifications Over 134 classifications were revised for 2018 as part of the ongoing USRP enhancement project Scope No change to intended scope of operation Why? Consistency, clarification and codification of established procedures Resources Amended classifications are summarized in a Quick Reference Guide and the Memorandum in first pages of the USRP, available at wcirb.com 20

22 2018 Changes Research Studies Retail Video, Book and Audio Stores Basis for Study Eroding payrolls in video store and to lesser extent book store classifications as industry evolves with technology Lines between classification becoming blurred as many stores sell books, videos and records Study Objective Review classification definitions for these industries to address reduced statistical credibility and evolving business practices 21

23 Study Findings Insufficient payroll in video store classification to generate credible advisory pure premium rate Operations, hazards, pay scale and size and type of goods handled are similar between video stores, book stores and audio media stores Many businesses now sell videos, books and audio media Audio media store experience is more consistent with book and video store experience than that of the retail store classification (8017) 22

24 WCIRB 2018 Regulatory Filing Proposals Eliminate video store classification (8070) Expand and redefine book store classification (8071) to include video stores and audio media stores Eliminate 75% receipts and square footage requirement from redefined book store classification (8071) 23

25 2018 Changes Research Studies Private Schools/Fitness Instruction Basis for Study Private school classification (8868) contains many non-homogeneous diverse groups of businesses (e.g., fitness instruction studios) Health club classification (9053) contains several non-homogeneous groups of businesses Not always clear differentiation between 8868 and 9053 Study Objectives Begin two-year study of private school classification by analyzing how fitness instruction studios should be classified Clarify demarcation between classifying fitness instruction studios and health clubs Evaluate whether groups of businesses currently classified as health clubs should be classified differently 24

26 Principal Study Findings Employers that provide athletic or fitness instructional programs comprise a homogenous, identifiable group and have significantly worse experience than other Classification 8868 employers Health club (Classification 9053(2)) operations differ from instruction-based fitness studios in that most Classification 9053(2) businesses are engaged primarily in providing an athletic facility or gym for clients to use at-will Some employers reporting payroll in Classification 9053(2) are offering athletic or fitness instructional programs with little or no at-will facility use, and are subject to reclassification Classification 9053(1), Baths, is not operationally consistent with the other constituents in Classification 9053 and has significantly worse loss to payroll experience 25

27 WCIRB 2018 Regulatory Filing Proposals Establish Classification 8870, Fitness Instruction or Studios all employees including receptionists, for employers engaged in operating fitness instruction programs or studios Reclassify a number of employers from Classification 9053(2) to the proposed new Classification 8870 Establish Classification 9054, Spas or Baths, for the operation of spa or bath facilities Revise Classification 9053(2), Exercise or Health Institutes, to better define its scope 26

28 2018 Changes Research Studies Unmanned Aircraft Systems/Aerial Drones FAA defines UAS as large (55 pounds or more) and small (less than 55 pounds) Small UAS operations, other than those by Construction and Erection Industry Group employers, are a General Inclusion New Classification 8720(4), Unmanned Aircraft System Operation, for construction employers and fee-based small UAS operations Large UAS operations are a General Exclusion 7428(1), Aircraft Operation other than agricultural, scheduled or supplemental air carriers, and 7410, Aircraft Operation agriculture dusting, spraying and seeding not members of the flying crew, amended to include ground crew for large UAS operations Employees who operate or monitor UASs from remote office locations with no exposure to other operations may qualify as Clerical Office Employees 27

29 2018 Changes (Continued) Research Studies Unmanned Aircraft Systems/Aerial Drones 3681(1), Instrument Mfg. electronic, amended to apply to the manufacture and feebased shop repair of small UASs 5128, Instrument professional or scientific, amended to state that it applies to the fee-based repair of small UASs away from shop New Classification 3830(2), Unmanned Aircraft System Mfg., for the manufacture of large UASs and the repair of large UASs by the manufacturer 7428(3), Aircraft Remanufacture, Conversion, Modification and Repair Companies, amended to include repair of large UASs on a fee basis, and repair work performed by the manufacturer away from shop 28

30 2018 Changes Research Studies Burglar Alarm; Fire Alarm; Audio/Video Systems Basis for Study Emerging technology has blurred distinctions between classifications Some classifications have expanded beyond original scope Emerging industries assigned by analogy may not fit well in classification Groups described by alternative phraseologies may be able to support own classification Study Objectives Identify subgroups that should be classified differently and as appropriate modify existing classification or create new classifications Review classification descriptions 29

31 2018 Changes (Continued) Research Studies Burglar Alarm; Fire Alarm; Audio/Video Systems Many employers have both 7605(1) and 7605(2) assigned Life safety systems often assigned both inside and outside buildings Minimal overlap of 7605(3) operations with 7605(1) and 7605(2) operations Significant overlap between 7605(3) and 9516(1) Loss to payroll ratio of 7605(1) and 7605(2) combined is higher than all of 7605 and statistically credible Loss to payroll ratio of 7605(3) is significantly lower than all of 7605 but with relatively low statistical credibility Loss to payroll ratio of 7605(3) is similar to that of reconstituted

32 Classification 7605 Burglar Alarm; Fire Alarm; Audio/Video Systems 2018 Regulatory Filing Proposals Combine Security Alarm and Fire Alarm into a single classification Eliminate Audio/Video Systems Classification 7605(3) and assign those employers to Classification 9516(1), Video, Audio and Radio Equipment Installation, Service or Repair shop and outside 31

33 Classification 9516 Television, Video, Audio and Radio Equipment; Auto or Truck Radio, Alarm and Electronic Findings Dissimilar operations for analogous assignments in 9516(1) Exceed intended scope of classification Significant overlap between 7605(3) and 9516(1) Loss to Payroll Ratios for telecommunication antennas and satellite TV installer subgroups are significantly higher than all of 9516 Subgroups are not highly credible by themselves but fairly credible when combined Loss to Payroll Ratio for 9516(2) is significantly higher than all of the 9516 with moderate statistical credibility Remaining employers in 9516 (mainly related to freestanding audio & video equipment) have significantly lower Loss to Payroll Ratios than other subgroups and experience is fully credible 32

34 Classification 9516 Television, Video, Audio and Radio Equipment; Auto or Truck Radio, Alarm and Electronic 2018 Regulatory Filing Proposals Amend Classification 9516(1) to remove alternate wordings, clarify its intended scope Also incorporate Classification 7605(3) Establish Classification 9531(1), Telecommunication Antenna Equipment Installation, Service or Repair shop and outside, with alternate wording Classification 9531(2), Satellite Television and Internet Antenna Equipment Installation, Service or Repair shop and outside Review for separation in future when satellite experience becomes more credible Limit relativity increase to 25% Establish Classification 8370, Automobile or Truck Radio, Alarm or Electronic Equipment Installation, Service or Repair shop and outside 33

35 Classification 5191 Office Machines; Computer Systems; Telephone Systems Findings Dissimilarity between operations assigned to Classification 5191(1) and those assigned to 5191(2) and 5191(3) with minimal overlap of employers Significant overlap between 5191(2) and 5191(3) employers Overlap in operations, lack of distinction in data reporting Loss to Payroll Ratio of employers assigned to 5191(1) is higher than all of 5191 and statistically credible Loss to Payroll Ratio of 5191(2) and 5191(3) combined is lower than all of 5191 and statistically credible 34

36 Classification 5191 Office Machines; Computer Systems; Telephone Systems 2018 Regulatory Filing Proposals Amend Classification 5191 to remove alternate wordings; 5191 will apply solely to office machines, point of sale machines Establish Classification 5193, Computer or Telephone System or Equipment Installation, Service or Repair shop and outside Combine constituents of Computer Systems Classification 5191(2) and Telephone System Classification 5191(3) 35

37 Classification 5128 Instrument Professional or Scientific - Findings Significant overlap between medical and non-medical instruments Dissimilarity of operations between instrument operations, wafer and semiconductor equipment, programmable industrial controls and building automation subgroups with little overlap of employers Programmable industrial controls and building automation industries are emerging and will continue to grow Loss to payroll ratios of various subgroups vary and most have at least partial statistical credibility 36

38 Classification 5128 Instrument Professional or Scientific 2018 Regulatory Filing Proposals Amend Classification 5128 to restore its intended purpose in applying to electronic professional, scientific or medical instruments Establish Classification 5129, Integrated Circuit and Semiconductor Wafer Processing Equipment Installation, Service or Repair away from shop Establish Classification 5130(1), Programmable Industrial Controls Installation, Service or Repair shop and outside, with alternate wording 5130(2), Building Automation and Energy Management Control System Installation, Service or Repair shop and outside Consider separating when Building Automation becomes more credible 37

39 2018 Changes Standard Exceptions All suffixes and alternate phraseologies for 8810 and 8742 eliminated Only Clerical Office Employees and Salespersons Outside are subject to rules for Standard Exceptions 8811, Libraries private librarians or professional assistants 8812, Libraries public librarians or professional assistants 8744, Boy and Girl Scout Councils district executives including Outside Salespersons 8746, Newspaper Publishing or Printing reporters or photographers including Outside Salespersons 38

40 2018 Changes Standard Exceptions Rules Section III, General Classification Procedures, Rule 4, Standard Exceptions It is not permissible to divide a single employee s payroll, within a single policy period, between a Standard Exception classification and any other classification with the exception of a single permanent job reassignment. Employees who otherwise qualify for assignment to a Standard Exception classification will not be disqualified from that assignment if they perform certain duties directly related to their clerical office or outside sales work as defined in Rules 4a and 4b. These duties include depositing funds at a bank, picking up or delivering the employer s mail, purchasing office supplies and entering an area exposed to the operative hazards of the business for ingress or egress purposes or for purposes in connection with clerical activities, such as delivering paychecks. 39

41 2018 Changes Dual Wage Thresholds Code Phraseology 2017 Threshold 2018 Threshold 5190/5140 Electrical Wiring $30.00 $ (1)/5205(1) Concrete or Cement Work $24.00 $ (2)/5205(2) Concrete or Cement Work $24.00 $ /5432 Carpentry $30.00 $ /5447 Wallboard Application $33.00 $ (1)/5482(1) Painting, Decorating or Paper Hanging $24.00 $ (2)/5482(2) Waterproofing $24.00 $ (3)/5482(3) Painting $24.00 $

42 2018 Changes (continued) Dual Wage Thresholds Code Phraseology 2017 Threshold 2018 Threshold 5484/5485 Plastering or Stucco Work $27.00 $ /5553 Roofing all kinds $23.00 $ /5633 Steel Framing light gauge $30.00 $ (1)/6220(1) Excavation N.O.C. $30.00 $ (2)/6220(2) Grading Land N.O.C. $30.00 $ (3)/6220(3) Land Leveling grading farm lands $30.00 $ /6308 Sewer Construction $30.00 $ (1)/6316(1) Water Mains or Connections Construction $30.00 $ (2)/6316(2) Gas Mains or Connections Construction $30.00 $

43 Thank you? Questions Brian Gray Director, Classification Administration and Education Paul Kim Director, Classification and Test Audit 42