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Multiple Enterprises

Under the Single Enterprise Rule, all employees engaged in activities that are "normal and usual" for an industry are covered by one classification. If a business has two or more operations that do not normally prevail in a business described by a single classification, then the Multiple Enterprises Rule may permit or require the assignment of multiple classifications to the operations. The Multiple Enterprises Rule is found in Part 3, Section III of the California Workers' Compensation Uniform Statistical Reporting Plan—1995.

Multiple Enterprises Rule Effective September 1, 2021:

If the employer’s business, conducted at one or more locations, consists of two or more distinct operations that do not normally prevail in the business described by a single classification, then the distinct operations shall be classified in accordance with the following rules:

  1.  If the distinct operations are Physically Separated in accordance with Section II, Rule 21, Physical Separation or Physically Separated, each distinct operation shall be separately classified.
    1. The payroll for employees (exclusive of Miscellaneous Employees) who perform activities integral to separately classified operations shall be divided between or among the applicableclassifications, provided complete and accurate payroll records are maintained pursuant to Section V, Rule 3, Division of Single Employee’s Payroll.

    2. The payroll of Miscellaneous Employees shall be classified pursuant to 3d below.

  2. If two or more of the distinct operations are not Physically Separated, such operations shall be assigned to the highest-rated classification applicable to the distinct operations conducted in the common workspace.

  3. The above paragraphs notwithstanding, division of payroll is permitted only if:
    1. The operation is not described by any of the General Inclusions;
    2. The division is not contrary to classification phraseology; and
    3. The division is not contrary to any other provisions contained in this Plan.
  4. Miscellaneous Employees do not engage in operations that are integral to each classifiable operation but perform operations in general support of more than one classifiable operation and cannot properly be classified in accordance with a single classification. Examples of Miscellaneous: Employees include but are not limited to supervisors, maintenance employees, power plant employees, laboratory researchers, security guards, shipping and receiving clerks, and yard employees.

Unless otherwise directed in this Plan, Miscellaneous Employees shall be assigned to the Governing Classification of the group of classifications to which their work pertains.

Multiple Enterprises Rule Prior to September 1, 2021:

  1. Operations that are physically separated and conducted with no interchange of labor are separately classified.
  2. Operations that are not physically separated or have an interchange of labor are classified as follows:
    1. If the operation that develops the most payroll (exclusive of Miscellaneous Employees) is described by a classification that has the higher pure premium rate, then all operations shall be assigned to the higher-rated classification.
    2. If the operation that develops the most payroll (exclusive of Miscellaneous Employees) is described by a classification that has the lower pure premium rate, then the higher rated classification is assigned to all employees, except:
      1. Employees engaged solely in activities described by the lower-rated classification; or
      2. Employees for which complete and accurate payroll records are maintained to identify the portion of their payroll earned in each activity; payroll for activities described by the lower-rated classification can be assigned to the lower-rated classification.
    3. If the distinct operations are described by classifications having the same pure premium rate, then each operation shall be separately classified.

Physical separation is achieved when operations are separated by permanent walls not less than eight (8) feet in height that are constructed from standard building materials or when operations are performed on separate floors or in separate buildings. Interchange of labor means employers alternate between 2 or more separately classifiable operations and engage in a single activity that is integral to two or more separately classifiable activities. There is one important thing to remember regarding the Multiple Enterprises Rule. In order to divide an employee's payroll among classifications, you must maintain payroll records that accurately record an employee's time spent working in each operation. Otherwise, all of that employee's payroll will be assigned to the highest-rated classification.

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