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EXCERPT

California Workers’ Compensation Uniform Statistical Reporting Plan—1995
Effective January 1, 2018

Part 3, Standard Classification System, Section IV, Special Industry Classification Procedures, Rule 2, Construction or Erection

 

2. Construction or Erection Work

This Rule applies to the construction and erection classifications listed in Appendix I, Construction and Erection Classifications. Division of payroll shall be made for each separate and distinct type of construction or erection operation that is specifically described by a classification, provided separate records of payroll are maintained and provided the use of any such classification in connection with a separate job or location is not restricted by classification phraseology or footnotes. When the operations at a job or location are classified on a divided payroll basis, the remuneration of any one employee may be divided between two or more classifications provided the employer has maintained complete and accurate records supported by original time cards or time book entries which show separately, both by individual employee and in summary by operations performed, the remuneration earned by such employee. Operations for which separate records of payroll are not maintained shall be assigned to the highest rated classification applicable to the job or location if payrolls are kept separately by job within the policy period; otherwise, the highest rated classification shall be assigned based on the entire policy period. Operations that normally prevail in connection with a classification shall not be subject to division of payroll, but shall be assigned to such classification, whether or not separate records of payroll are kept.

When an employer retains one or more employees as members of a crew that operates Unmanned Aircraft Systems (aerial drones) with an aircraft system and payload total combined weight of less than 55 pounds in connection with its construction or erection operations, such members of the Unmanned Aircraft System operating crew shall be classified as 8720(4), Unmanned Aircraft System Operation, provided they are engaged exclusively in such operations, or are engaged in such work for any portion of their time and devote the balance of their time to clerical office duties or outside sales. Employees who are members of an Unmanned Aircraft System operating crew and also perform or supervise construction or erection operations shall be classified based on the construction or erection operations they supervise or perform. Operating crew members working remotely from an office location with no exposure outside of the clerical office shall be classified as 8810, Clerical Office Employees, subject to the Standard Exceptions rule.

The operating crew of Unmanned Aircraft Systems with an aircraft system and payload total combined weight of 55 pounds or heavier shall be classified in accordance with Part 3, Section III, Rule 6, General Exclusions.

When the operations at a job or location are limited to minor property repairs for other concerns on a fee basis for which no contractor’s license is required, such operations shall be classified as 9015(1), Building Operation – N.O.C. – all other employees. Such repairs include but are not limited to patching walls, touch-up painting, faucet repair, door hardware repair and replacement of electrical switches.

In addition, the remuneration of employees assigned to construction and erection classifications is subject to the following:

a. Determination of Dual Wage Construction or Erection Classification

A classification that requires the regular hourly wage to equal or exceed a specified amount may be used only upon verification that the employee is paid an hourly wage that equals or exceeds the specified amount.

 

(1) Records of Payroll

For all employees, other than salaried employees, determination of the regular hourly wage must be supported by one of the following sources:

    (a) Original time cards or time book entries for each employee. Original records must include the operations performed, the total hours worked each day and the times the employee started and ended each work period throughout the workday. At job locations where all of the employer’s operations cease for a uniform unpaid meal period, recording the start and stop times of the uniform break period is not required.
    (b) A valid collective bargaining agreement that shows the regular hourly wage rate by job classification of worker. If using a collective bargaining agreement, the records must include an employee roster by job classification that permits the reconciliation of individual employees to the job classifications set forth in the collective bargaining agreement.
 

For all employees, other than salaried employees, the payroll for which an hourly wage determination cannot be reconciled to time cards or time book entries or collective bargaining agreements as specified above shall not be assigned to a classification that requires the regular hourly wage to equal or exceed a specified amount.

For the purpose of administering this rule, a salaried employee is an employee who is remunerated at an established level of compensation on a weekly, monthly or annual basis, without regard to hours worked, sales volume, production levels or similar variables. (In addition to a base salary, salaried employees may also receive bonuses or commissions.)

(2) Total Remuneration for Regular Hourly Wage Calculation

The remuneration used to calculate a regular hourly wage shall be determined as follows:

    (a)

The following remuneration shall be used to determine the hourly wage, without regard to whether such payments are included as payroll:

  1. Hourly wages
  2. Piecework
  3. Salary
  4. Commissions and incentive payments that are calculated and paid each pay period
  5. Fringe benefit payments made by the employer. However, when such payments are excludable from payroll, they shall be excluded from the hourly wage calculation. (See Section V, Payroll – Remuneration.) 
    (b)

The following remuneration shall not be used to determine the hourly wage, without regard to whether such payments are included as payroll:

  1. Allowances
  2. Reimbursed business expenses
  3. Premium portion of overtime pay
  4. Compensation, such as quarterly or annual bonuses, that is not calculated and paid each pay period
  (3) Regular Hourly Wage Calculation
    (a) Except as provided below, an employee’s regular hourly wage shall be calculated by dividing each employee’s total remuneration by the number of hours worked during the pay period. As necessary, the regular hourly wage shall be reconciled with other records in accordance with Rule 2a(1), Records of Payroll.
    (b)

An employee’s regular hourly wage may be separately calculated and payroll separately classified for work performed in connection with:

  1. Each job that is subject to federal, state or local prevailing wage laws; and
  2. Each separate and distinct type of construction or erection operation that is specifically described by a classification.
    (c) For salaried employees, the regular hourly wage shall be determined by dividing the total annual remuneration by 2,000 hours. If an employee is salaried for less than 12 months, the regular hourly wage shall be calculated for the salaried period on a prorated basis.

Example 1 – Combination Hourly Pay and Piecework

An employee of a roofing contractor is paid as follows: $15.00 per hour for work performed at the contractor’s equipment yard; $25.00 per hour tearing off old roofs; and piecework rates when installing or repairing roofing.

The employer maintains time cards for each employee indicating the operations performed, the time the employee started and ended each work period throughout the workday, the total daily hours worked, and remuneration earned by each employee. During the pay period the employee worked 16 hours in the yard, 4 hours performing roofing tear off, and 20 hours installing or repairing roofs. The roofing piecework totaled $585.

Weekly Payroll Journal: J. Smith

Day

Activity

Hours

Hourly Rate

Piece Units

Piece Rate

Earnings

25-Feb

Yard

8

$15.00

n/a

n/a

$120.00

26-Feb

Yard

8

15.00

n/a

n/a

 120.00

27-Feb

Tear-off

4

25.00

n/a

n/a

 100.00

 

Roof – bitumen

4

n/a

4

$50.00

 200.00

28-Feb

Roof – tile

8

n/a

4

55.00

 220.00

1-Mar

Roof – shingle

3

n/a

1

65.00

   65.00

 

Roof – patch

5

n/a

4

25.00

 100.00

Total

 

40

 

 

 

$925.00

Determination of the regular hourly wage:

Employee

Gross Pay

Hours Worked

Regular Hourly Wage

J. Smith

$925.00

40

$23.13

 

Example 2 – Commission

An employee of a plumbing repair company is paid commissions based on billed hours and product sales. The employee earns 20% of the billed hours (hourly rate charged the customer) for each repair completed. The employer’s labor rate billed to customers is $80 per hour. The employee earns 40% commission on the sale of water heaters and plumbing fixtures. The employer maintains time cards for each employee indicating the operations performed, the time the employee started and ended each work period throughout the workday, the total daily hours worked, and remuneration earned by each employee. During the pay period the employee worked 65 hours, although only 43 hours were billed to customers. The employee also sold plumbing fixtures totaling $1,500.

Bi-Weekly Payroll Journal: M. Jackson

Day

Hours Worked

Billed Hours

Commission on
Billed Hours

Fixture Sales

Commission
on Sales

Earnings

18-Mar

0

 

 

 

 

 

19-Mar

8

5

$80.00

$100.00

$40.00

$120.00

20-Mar

6

3

48.00

45.00

18.00

66.00

21-Mar

7

5

80.00

350.00

140.00

220.00

22-Mar

8

9

144.00

50.00

20.00

164.00

23-Mar

8

4

64.00

50.00

20.00

84.00

24-Mar

3

3

48.00

600.00

240.00

288.00

25-Mar

0

 

 

 

 

 

26-Mar

7

5

80.00

75.00

30.00

110.00

27-Mar

7

4

64.00

85.00

34.00

98.00

28-Mar

6

3

48.00

85.00

34.00

82.00

29-Mar

5

2

32.00

 60.00

24.00

56.00

30-Mar

0

 

 

 

 

 

31-Mar

0

 

 

 

 

 

Total

65

43

$688.00

$1500.00

$600.00

$1288.00

Determination of the regular hourly wage:

Employee

Gross Pay

Hours Worked

Regular Hourly Wage

M. Jackson

$1288.00

65

$19.82

 

Note that in the above example, if the hourly wage calculation were based, incorrectly, on billable hours, the regular hourly wage would be overstated. Therefore, if time cards or time book entries to verify the hours worked are not available, the payroll shall not be assigned to a classification that requires the regular hourly wage to equal or exceed a specified amount. It is incorrect to base the regular hourly wage calculation on billed hours.

Example 3 – Salary

An employee of a sheet metal contractor is retained as project supervisor at an annual salary of $60,000. The employee was retained for only three months during the policy period. As the employee was salaried for 3 of 12 months or 25% of the annual salary period, the regular hourly wage is calculated based on the prorated salary ($60,000 x 25% = $15,000), divided by the prorated number of hours (2,000 x 25% = 500). The regular hourly wage calculation is $15,000 / 500 = $30.00 per hour.

b.    Governing Classification (Construction or Erection)

The governing classification shall be determined on the basis of the job within the policy period if payrolls are kept separately by job within the policy period; otherwise, on the basis of the entire policy period. Two classifications distinguishable only by the regular hourly wage of employees shall be combined to determine the governing classification.

c.     Miscellaneous Employees (Construction or Erection)

If the construction or erection operations at any location are assigned to two or more classifications, the payroll of all miscellaneous employees who cannot properly be assigned to specific classifications shall be assigned to the governing classification, except that when the governing classification is determined to be the combination of two classifications distinguishable only by the regular hourly wage of employees, the payroll of a miscellaneous employee shall be assigned based on the regular hourly wage of such employee. Miscellaneous employees include, but are not limited to, supervisors, watchpersons, traffic control flagpersons, drivers, construction or safety engineers, construction debris cleanup employees and job-site equipment maintenance and repair employees.

d.    Executive Level Supervisors

Executive level supervisors oversee the insured’s construction operations through second level (or higher) supervisors. In addition, on job sites where the insured subcontracts all operations to licensed subcontractors, executive level supervisors may oversee operations through subcontractors. Notwithstanding any other provisions contained herein, it is not permissible to divide a single employee’s payroll, within a single policy period, between Classification 5606, Contractors – executive level supervisors, and any other classification.

Executive level supervisors over construction operations wherein the insured develops payroll in one or more construction or erection classifications shall be eligible for Classification 5606 provided not less than two levels of supervision, as defined below, are retained between the executive level supervisor and the workers performing the actual construction operations.

(1)  First level supervisors generally work at a job site with a single crew of workers performing a single trade and do not travel between concurrent job sites to supervise different crews. While first level supervisors may engage in construction activities alongside the crew, as supervisors they have the authority to direct and control the crew’s work. This control includes training, evaluating, and disciplining crewmembers. Employees who assist with training or leading a crew, but who do not have the authority to direct and discipline crewmembers, or are not accountable for the work performed by the crew, are not considered first level supervisors.

(2) Second level supervisors generally have broad authority over the work crews at one or more job sites. Second level supervisors direct and control the work of first level supervisors. The duties of second level supervisors are exclusively supervisory in nature.

e.     Idle Time, Strike Pay, or Other Payroll Paid for Hours Not Worked

If an employee’s payroll is segregated among classifications based upon the hours worked in each operation, the payroll for idle time, strike pay, or other payroll paid for hours not worked shall be apportioned among the classifications applicable to the employee’s payroll based on the earnings for time actually worked in those classifications.

Example

A construction worker engages in fence construction and conduit construction. The worker is paid $12 per hour for fence work and $15 per hour for conduit work. The number of hours recorded for fence work, conduit work and idle time is shown below. The earnings for time actually worked in Classification 6400 is 63.8% of the payroll for Classifications 6400 and 6325 combined ($264.00 / $414.00 = 63.8%). The idle time apportioned to Classification 6400 is therefore 5.1 hours (8 hours idle time x 63.8% = 5.1 hours), the payroll for idle time in this classification is $61.22 (5.1 hours x $12 per hour idle time = $61.22), and the total payroll in this classification is $325.22 ($264.00 payroll + $61.22 idle time payroll = $325.22). The earnings for time actually worked in Classification 6325 is 36.2% of the payroll for Classifications 6400 and 6325 combined ($150.00 / $414.00 = 36.2%). The idle time apportioned to Classification 6325 is therefore 2.9 hours (8 hours idle time x 36.2% = 2.9 hours), the payroll for idle time in this Classification is $34.78 (2.9 hours x $12 per hour idle time = $34.78), and the total payroll in this Classification is $184.78 ($150.00 payroll + $34.78 idle time payroll = $184.78).

Work Record

Operation

Hours

Rate per Hour

Payroll

% of Payroll for Hours Worked

Fence Construction – Classification 6400

22

$12.00

$264.00

63.8%

Conduit Construction – Classification 6325

10

$15.00

150.00

36.2%

Subtotal

32

N/A

$414.00

100 %

Idle Time

8

$12.00

96.00

N/A

Total

40

N/A

$510.00

N/A

 

Apportionment

Operation

Hours

Rate per Hour

Payroll

% of Payroll for Hours Worked

Idle Time – fence

5.1

N/A

$61.22

63.8%

Idle Time – conduit

2.9

N/A

34.78

36.2%

Total

8.0

N/A

$96.00

100%

 

Reconciliation

Classification 6400 Payroll

Classification 6325 Payroll

Payroll for hours worked

$264.00

Payroll for hours worked

$150.00

Idle time payroll

61.22

Idle time payroll

34.78

Total fence construction payroll:

$325.22

Total conduit construction payroll:

$184.78

Total Payroll ($325.22 + $184.78) = $510.00