Out-of-State Contractor Information. This annual premium is used to determine the assessments for each ISI. The ISI will receive their annual premium calculation worksheet along with four quarterly assessment installment invoices.
When the SCOPES Manual is updated, revisions to existing job classifications and additional job classification categories will be integrated into the computation of net premiums. Future modifications and updates to these manual are automatically integrated in to these calculations. Self-certification must be renewed each year. Once F. You must check with your regulatory authority as to is available application to your workers compensation policy.
These employees must be classed in listed, special contracting class codes. As mentioned above, not all workers comp class codes qualify for this credit application. For example you'll find codes for carpentry, electrical contracting, plumbing and concrete work along with others to be included within this program.
In general the codes used for this workers comp policy credit are approved by each state. Florida began its program in but the other 11 states all began theirs between and Some programs were required by state legislation but the majority were approved by state insurance regulators under their existing authority. The effect of a credit program in Connecticut depends on the number of contractors who could qualify and that, in turn, depends on how the minimum qualifying wage level is set.
All of these amounts are substantially higher than qualifying wage levels used in the other states. It appears that a carefully structured credit program could reduce costs for high-wage contractors without substantially increasing premiums for all construction employers. Such a result would make the construction market somewhat more competitive and could produce savings in local and state government projects covered by prevailing wage laws.
Once such a program were in place, there might be pressure to lower the qualifying wage or expand the covered classifications to encompass more contractors. We note that some states started with fairly high qualifying wages and later lowered them. If the number of contractors receiving the credit becomes too large, the overall premium increase needed to offset the credits could become significant. Workers' compensation premiums are set using many variables but all premiums are pegged to the insured employer's total payroll.
Premiums are commonly expressed in dollars per hundred dollars of payroll. Thus, two employers with the same insurance company, the same safety record, and covered employees doing exactly the same job may still have different workers' compensation costs if one employer pays higher wages than the other.
The rationale for basing premiums on wages is that workers' compensation benefits are partly tied to a claimant's earnings and thus, total payroll provides a good measure of potential losses or risk. Contractors and unions have argued that basing premiums on total payroll, while it may be valid for most industries, is unfair for the construction industry.
Many construction workers work for several different employers throughout the year and most are unemployed or work short hours for parts of the year because of the seasonal nature of construction work. When they work, construction workers, especially union members, receive relatively high pay, partly to compensate for the "down times" of the construction year. Basing contractors' workers' compensation premiums on these high wages, it is argued, allows insurance companies to collect more money than they need to cover actual risk because the construction workers' exposure to workplace hazards and injuries is only intermittent.
For construction employment, they say, it would be fairer to base premiums on the number of hours worked by each covered employee, thus removing the penalty for paying high, union wages. Another argument for some type of construction industry adjustment rests on the prevailing rate laws.
The federal government and almost half of the states have laws requiring contractors to pay higher, prevailing wage rates to workers on government construction jobs.
Prevailing wage laws, which apply only to construction jobs, serve to increase workers' compensation premiums for contractors even when they are not working on public jobs because they inflate total payrolls. Insurers and workers' compensation rating organizations oppose changing the basis for contractors' premiums from payroll to hours because of the administrative and auditing difficulties involved and because they believe hours are not as good a way to measure insurers' risk as total payroll.
Indemnity i. As an alternative to basing contractor premiums on hours worked, 12 states have adopted a system of giving credits on workers' compensation premiums to contractors who pay high wages.
These credit programs appear to avoid the administrative problems that arise from shifting to premiums based on hours worked while still addressing some of perceived penalties produced by prevailing wage laws and payment of high hourly wages for seasonal construction jobs. The 12 are a good cross-section of states. They are located in all regions of the country. Maryland, Montana, New Mexico, New York, Oregon, and Pennsylvania have state-run workers' compensation insurance funds that compete with private insurers in the state.
Florida, Massachusetts, Montana, New Mexico, and Pennsylvania adopted their credit programs in response to legislative enactments. The rest were instituted by state insurance authorities using their existing powers. Florida's program, which went into effect in , is the oldest. All the other programs date from the s.
In each case, unionized contractors and construction unions were major catalysts for adopting the programs. All of the states, except Florida, have prevailing wage laws. Florida repealed its state prevailing wage law in , but Broward county and several cities in Florida have local prevailing wage requirements.
The premium adjustment programs in the 12 states have many common elements. They all operate basically the same way, regardless of whether or not premiums are calculated by NCCI. We describe both the common elements and the state-by-state variations below.
Not all states have information about the effects of their programs. For those that do, the percentage of participating contractors varies from a low of 1. General Design. Premium credit programs are designed to vary a construction contractor's workers' compensation insurance premium by giving percentage credit against those premiums to contractors who pay higher-than-average wages for construction jobs. The higher the wage, the bigger the credit.
The application is made to the NCCI and based on payroll from the 3rd quarter of the previous year. If you did not engage in contracting operations during the third quarter of the prior calendar year, the requested information to be provided should then be for the last complete calendar quarter prior to the effective date of your workers compensation policy.
Only straight time is included in the calculation.
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