In this edition: The regulations contained in the California Workers' Compensation Uniform Statistical Reporting Plan—1995 help determine reportable remuneration. But what about independent contractors?
The California Workers' Compensation Uniform Statistical Reporting Plan—1995 (USRP) contains the Insurance Commissioner’s regulations for the reporting of policy information and experience, including payroll experience for a company’s employees, for all California workers’ compensation insurance policies.
It is important to recognize that the USRP does not establish whether a worker actually is an employee and the rules for reporting data apply only to employees. The WCIRB often receives questions regarding whether a worker is an employee or an independent contractor. Unfortunately, neither the WCIRB nor the California Department of Insurance (CDI) make determinations regarding whether a worker is or is not an employee. Shown below are some common examples.
The USRP at Part 3, Section V, Payroll – Remuneration, Rule 4, Drivers’ and Their Helpers’ Payroll, provides direction regarding the determination of reportable payroll for employee drivers who provide their own vehicle and who pay the related operating expenses:
Drivers and their helpers shall mean employees whose principal duties are performed in connection with the operation of motor vehicles. When drivers own or furnish vehicles such as, but not limited to, log trucks, tractor/trailer rigs, furniture vans, and bobtail trucks that have a gross vehicle weight rating of 10,000 pounds or more and pay the operating expenses in connection therewith, no less than twenty-five percent (25%) of the total amount paid for the hire of such vehicles and their operating crews shall be deemed to be the payroll of such drivers and their helpers.
When drivers own or furnish vehicles such as, but not limited to, motorcycles, passenger cars, vans, pickup trucks, sport utility vehicles and minivans that have a gross vehicle weight rating less than 10,000 pounds and pay the operating expenses in connection therewith, and when said drivers are not reimbursed for the business use of the vehicle under an accountable plan, no less than sixty percent (60%) of the total amount paid for the hire of such vehicles and drivers shall be deemed to be payroll.
Please note that this rule only applies when the drivers and helpers at issue are employees and provides direction regarding the determination of reportable payroll for employee-drivers and employee-helpers. This rule does not direct that all drivers who provide their own vehicle and pay the related operating expenses are employees.
The USRP at Part 3, Section IV, Rule 4, Farms, subrule c(3), provides special industry classification procedures applicable to the agricultural industry. With regard to payroll the rule states, in pertinent part:
Payroll for all employees performing any type of farm work for a price per unit, contract or measure shall be based upon the total remuneration earned by such persons, and in the absence of adequate payroll records substantiating such earnings, the total contract price shall be deemed to be the total earnings; however, if the entire contract involves the use of motor vehicles or farm machinery with drivers and their helpers, not less than one fourth (1/4) of the total amount paid for the hire of such equipment and their operating crews shall be deemed to be the total earnings of such drivers and their helpers.
The rule provides instructions regarding farm workers who are paid on a contract basis and the amount to be included as payroll if the workers are employees. The rule does not direct that all farm contract workers are employees.
The WCIRB often receives inquiries regarding whether a worker or workers are employees of a business, but as stated above, the WCIRB and the CDI do not make determinations regarding the employment status of workers. Such determinations are regulated by the Department of Industrial Relations, Division of Labor Standards Enforcement. The Department of Industrial Relations has a section on its website devoted to the subject of employment status. Please refer to: