Question

The state workers’ compensation board that governs workers’ compensation for the state that your company resides and performs all of its business in, has decided to reject the four exceptions to the governing classification and single enterprise rule in your state. Understanding this is a very big issue, your company’s legal team has elicited your help to write an argumentative paper that will be presented to the workers’ compensation board during the public hearings scheduled for next week. Compose a paper that defends the following list:

1. the Standard Exception classifications,

2. the Interchange of Labor rules,

3. the General Exclusion classes, and

4. the use of the Multiple Enterprise rule.

The legal department is depending on you to ensure that to help the board understand why the rejection of these exceptions would be so detrimental to your business. Make sure you argue your points based on a company with 8,000-plus employees, within seven different manufacturing sites and two major administrative buildings that are separated geographically from the plants. Your EMR for the trailing 36-month period is 0.94 and the gross revenue for your company is $1.3 billion. Your paper must be a minimum of three pages (not including the title and reference page) and include at least two academic resources. All information from outside resources should be cited in APA format. Please include an abstract that summarizes the key points of your defense and/or argument.

Answer 1

The Four Exceptions to the Governing Classification

The state workers compensation board that governs workers’ compensation has decided to reject the four exceptions to the governing classification and single enterprise rule in the state where the company resides and performs all of its business. Governing classification is the workers compensation classification that applies to the majority of the insured payroll other than the standard exception classes. It usually identifies the type of work being performed by the insured business and is used to properly determine how certain employees within a business are classified. Single Enterprise Rule directs that activities that are normally associated with a specific business are assigned to the one classification that most accurately describes the entire business even if the business is operated at more than one location ("Classification Procedures | Workers' Comp Technical Achievement Program | Verisk Analytics," n.d.). This decision by the state workers compensation board to reject the four exceptions to the governing classification and single enterprise rule is so detrimental to the business and should not be rejected.

The rejection of standard exception rule will affect the business that has more than 8,000 employees most of whom fall under standard exception rule. The payroll for those operations of the business that are referred to as standard exception is separated from that contained in the basic classification, which includes clerical office employees, outside sales persons, drivers, messengers, and chauffeurs in the business ("Classification Procedures | Workers' Comp Technical Achievement Program | Verisk Analytics," n.d.). Some duties or activities are so common to the business and are so far outside the operation activities of the business that employees engaged in this position need to be classified separately. Therefore, the rejection of the standard exception rule will impose difficulty to the business in classifying these employees in line with governing classification rule.

Rejection of Interchangeable of Labour rules will also create problems to the business as there will be no any rule that allows the business to split a single employee’s payroll between or among several class codes that may be present within the operation of the business. The rejection of this exception will deny the company the opportunity to maintain proper payroll records which discloses the actual payroll by classification, by employee. Thus, imposing significant problem in recording as the records must indicate the actual time spent working within each job classification and an average hourly wage comparable to the employer’s industry. Therefore, allowing for estimation or percentage allocation of numeration which is not favorable to the business. If interchangeable of labor is rejected, it will be difficult for the business to correctly assign the employees to the payroll that carries the highest rate representing any part of their work as the payroll will not be properly segregated. Besides, it will create a challenge for the business, which has EMR of 0.94 for the trailing 36-month period to be charged based on the employee’s actual exposure to injury as the classification used for an employee will be inappropriate to the job performed.

Some operational activities of the business do not fit the governing classification due to the unexpected existence of such an operation as part of a particular business (Pennsylvania Compensation Rating Bureau, 2011). The business is involved in manufacturing of furniture and saw milling is thus one of the activities of the business. Operations that are described by the general exclusions require division of payroll notwithstanding that the classification wording may include the term all. Therefore, rejection of this rule will make the company incapable of dividing its payroll for the generally excluded employees.

Lastly, rejection of Multiple Enterprise Rule will not allow the entity to conduct additional operations not usual or customary to the business. The business has seven different manufacturing sites and two administrative building that are separated geographically from the plants. Such disparate activities allowed the business to qualify for the separation of payroll into multiple classifications. Thus, the rejection of the rule will not allow the business to enjoy the benefits of the separation of payroll into multiple classifications.

In conclusion, the purpose of the four exceptions to the governing classification and single enterprise rule are designed to reflect the operations of the business. Besides, the purposes of the worker’s compensation classification system is to group employers with similar operations into classification so that the business reflects its operations common to other businesses and the rate charged reflects the exposure to loss common to other businesses (Pennsylvania Compensation Rating Bureau, 2011). However, there are exceptions to the governing rule of employee’s classification, which are so important to businesses. Therefore, rejection of these exceptions to governing classification and single enterprise rule will affect negatively the operations of the business as discussed and they should not be rejected by state workers compensation board.

References

Classification Procedures | Workers' Comp Technical Achievement Program | Verisk Analytics.

(n.d.). Retrieved from http://www.verisk.com/insurance/products/premium-audit-advisory-service/technical-achievement-program/workers-comp/chapter-2.html

Pennsylvania Compensation Rating Bureau, (2011). Pennsylvania Workers Compensation

Manual of Rules, Classifications and Rating Values for Workers Compensation and for Employers Liability Insurance. Pennsylvania.

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