SureNotice News

Notice re: NCCI Filing Item B-1433

posted Russell Power - Tuesday, January 03, 2017

TDI has posted notice of a filing by the National Council on Compensation Insurance (NCCI). NCCI's filing proposes changes that would clarify and enhance Rule 1 - Classification Assignment and Rule 2 - Premium Basis and Payroll Allocation of the NCCI Basic Manual. The filing proposes that the changes in Item B-1433 apply to new and renewal workers' compensation policies effective on and after October 1, 2017.

 You may review a copy of the NCCI's filing on the TDI website or in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78701. The notice includes information about how to submit written comments and hearing requests. Written comments and hearing requests are due February 6, 2017. 

 For more information, please contact the Office of the Chief Clerk at ChiefClerk@tdi.texas.gov or 512-676-6585.


**********************************************************************************************

Texas Department of Insurance
Notice of Workers Compensation Filing: National Council on Compensation Insurance
Item B-1433

  •   The National Council on Compensation Insurance (NCCI) filed Item B-1433Revisions to Manual Rule 1Classification Assignment and Rule 2Premium Basis and Payroll Allocation to clarify and enhance both rules.

  •   This item proposes changes to NCCI's Basic Manual for Workers Compensation and Employers Liability Insurance (Basic Manual) Rule 1 - Classification Assignment; and Rule 2 - Premium Basis and Payroll Allocation. For Texas, Item B-1433 includes proposals that would:

o Amend Rules 1-B-2-c, 1-B-5, and 1-D-5 to clarify the rules' application.
o AmendRules1-B-3and1-B-4toaddcommonoperations.
o Clarify and refine language in Rules 1-C-1, 1-C-2, 1-D-3-f, and 1-D-6.
o Amend Rule 1-C-2-j by deleting the Texas Exception Rule definition of "Stories in Height"

and replacing it with NCCI's Rule definition for "Stories in Height."
o Amend the exceptions to Rules 1-F-3-b and 2-A.
o Amend Rule 2-B to clarify its definitions and application; and to update what is included

in payroll.
o Amend Rules 2-D and 2-E to clarify their application and to address the effects of various

situations on payroll.
o Make a number of formatting and grammatical changes for clarity.

Affected NCCI Manuals:

Basic Manual for Workers Compensation and Employers Liability Insurance
Requested Effective Date: The filing proposes that the changes in Item B-1433 apply to new and

renewal workerscompensation policies effective on and after October 1, 2017.

Review and Comment:

Notice of Filing NCCI

Item B-1433

Page 2 of 2

  •   TDI prepared this notice. You may review a copy of NCCI's filing in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78701; or on the TDI website at www.tdi.texas.gov/rules/2016/nccimanual.html during the comment period.

  •   To comment on the filing or to request a hearing, submit two copies of your comments or hearing request by 5 p.m., Central time, on February 6, 2017. Refer to TDI ECase No. 11699.

    o Send one copy to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

    o Send the other copy to CommercialPC@tdi.texas.gov, or to Marianne Baker, Director, Property and Casualty Lines Office, Mail Code 104-PC, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

    Procedure: NCCI filed Item B-1433 (TDI ECase No. 11699; SERFF Tracking No. NCCI-130670465) with the Texas Department of Insurance on August 9, 2016, under the workers' compensation manual rule filing procedure adopted in Commissioner's Order No. 3142, dated March 21, 2014.

Issued in Austin, Texas on January 3, 2017.



___________________________________

Norma Garcia, General Counsel Texas Department of Insurance 

***************************************************************

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 1 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

PURPOSE

This item clari es and enhances NCCI’s Basic Manual for Workers Compensation and Employers Liability Insurance (Basic Manual) Rule 1—Classi cation Assignment and Rule 2—Premium Basis and Payroll Allocation.

BACKGROUND

NCCI has an ongoing process dedicated to the systematic research, analysis, and maintenance of
NCCI’s manuals. This process ensures that NCCI products continue to add value to the various industry stakeholders. As a result of this research, NCCI is proposing certain changes to
Basic Manual Rules 1 and 2.

PROPOSAL

The following is a summary of the key changes proposed to Basic Manual Rules 1 and 2:

  • Rule 1-B-2-c—Salespersons or Collectors—Outside (Code 8742)

    This item clari es that district or regional managers who travel between locations of the employer to perform various duties not involving outside sales or collection are not assigned to Code 8742. They must be assigned to the classi cation that best describes their duties.

  • Rule 1-B-3—General Inclusions

    General inclusions are operations that appear to be separate businesses but are included within all basic classi cations. These operations are not separately classi ed. The following operations are to be added to, or updated in, the list of general inclusions:

    • Add stores and day care services operated by the employer for employee use. These operations have become common to many businesses.

    • Update the description of an employer printing on its own products or of its own materials for advertising or packaging.

  • Rule 1-B-4—General Exclusions

    General exclusions are operations in a business so unusual for the type of business described by the applicable basic classi cation that they are separately classi ed even though the operations are not conducted as a secondary business. This item proposes to eliminate employer-operated day care service from the list of general exclusions. This type of operation has become common to many businesses and is proposed to be added as a general inclusion.

  • Rule 1-B-5—Governing Classi cation

    Generally, a governing classi cation at a speci c job or location is the classi cation, other than a standard exception classi cation, that produces the greatest amount of payroll. This item clari es how to determine the governing classi cation when:

    • A basic classi cation produces the greatest amount of payroll

    • A basic classi cation is applicable but no payroll is assigned

      The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

page1image30488

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 2 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

  • Multiple basic classi cations apply

  • Multiple classi cations apply but no payroll is assigned to any of the basic classi cations

  • A basic classi cation is not applicable

  • Rule 1-C-1—Classi cation Captions and Notes
    This item clari es the de nitions for caption and note. It also adds the term “phraseology” as a common

    alternative to “classi cation wording.”

  • Rule 1-C-2—Words and Phrases

    • The de nition of “Clerical” will be updated to remove an obsolete reference to drafting.

    • The classi cation examples referenced under Stories in Height will be eliminated because they are unnecessary and do not provide value to the de nition.

    • A rule will be added to de ne “Separate and Distinct Business.” This rule will provide guidance on what quali es as a separate and distinct business or operation.

  • Rule 1-D-3-f—Employee Leasing, Labor Contractors and Temporary Labor Services
    The term “Professional Employer Organizations” will be added because it is commonly used in the

    industry and in NCCI’s manuals. Also “employee leasing” will be changed to “employee leasing rms.”

  • Rule 1-D-5—Businesses Described by a Standard Exception Classi cation

    This item clari es that the rule applies to individual locations as well as to the overall business.

  • Rule 1-D-6—Classi cations Limited to Separate Businesses

    This rule will be simpli ed but also updated with the addition of “and Distinct” to the title. This is for consistency with the proposed addition of Rule 1-C-2-l, which de nes a separate and distinct business.

  • Rule 1-F—Changes or Corrections in Classi cations
    The following will be added to the list of operations that are exempt from the rule:

    • “Professional employer organization” is a common alternative term for an employee leasing rm. The policies for these entities often have numerous classi cations for different operations that are added or deleted during a policy term.

    • Operations assigned to standard exception classi cations can be added to a policy at any time.

    • General exclusions are operations so unusual for a business that they are classi ed separately even though they are not conducted as a secondary business. These operations could be added at any time during a policy term and should be classi ed appropriately.

      The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

page2image29400

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 3 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

  • Rule 2-A—Premium Basis
    This item revises the exception to the rule to accommodate classi cations using a premium basis other

    than per capita.

  • Rule 2-B—Payroll

    The following changes will be made to Rule 2-B:

    • Clarify the rule to indicate that “payroll” and “remuneration” mean money or substitutes for money. The terms mean the same in all rule, classi cation, and endorsement references.

    • Eliminate the inclusion of payments or allowances for hand tools or hand-held power tools used by employees in their work. This is an outdated concept because there are numerous items that employees purchase and are reimbursed for by their employer. These are allowed to be excluded from audit.

    • Add employee-authorized salary reductions for health savings accounts and exible spending accounts to the list of payroll inclusions. This is similar to employee savings plans and retirement or cafeteria plans.

    • Increase the maximum amount for expense reimbursements without veri able receipts from $30 to $75 per day. This revision provides a more current and reasonable expense allowance.

    • Add a rule to address that reimbursements for allowable travel expenses permitted by a governmental contract are excluded from payroll. The employer must produce a copy of the contract, and the allowable travel expenses must be in addition to the current wage of the employee.

    • Add a rule to include payroll adjustments by the employer to raise employees’ wages to federal, state, or local minimum wage, whichever is higher.

    • Replace the term “supper money” with “meal money” for a more accurate description.

    • Add educational assistance and relocation and moving expenses to the list of employer-provided perks that are excluded from payroll. These are common perks provided by employers to their employees.

    • Add health savings accounts and exible spending accounts to the list of employer contributions to employee bene t plans that are excluded from payroll.

  • Rule 2-D—Payroll Limitations
    The following changes will be made to Rule 2-D:

    • Clarify the rule applies to executive of cers, members of LLCs, partners, and sole proprietors, and to classi cations with notes that indicate payroll limitations.

    • Address how payroll limitations are impacted by overtime pay, partial weeks worked, and bonuses earned. This is part of NCCI’s continuing effort to clarify and modernize the rules.

      The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

page3image30440

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NA TIONALCOUNCILONCOMPENSA TIONINSURANCEI,NC. B-1433 (AppliesinA:KA,LA,RA,ZC,OC,TD,CF,LG,AH,II,AI,DI,LI,NK,S, PAGE4 KYL,AM,DM,EM,OM,SM,TN,EN,HN,MN,VO,KO,RR,IS,CS,D,
TNT,XU,TV,AV,TW,V)

FILINGMEMORANDUM

ITEMB-1433—REVISIONSTOBASICMANUALRULE1—CLASSIFICA TIONASSIGNMENT ANDRULE2—PREMIUMBASISANDP A YROLLALLOCA TION

Rule2-E—ExecutiveOf cersM,embersofLimitedLiabilityCompaniesP,artnersa,ndSole Proprietors

Thisrulewilbleupdatedtoaddressthetreatmenotafnemployeewhoisnoatnexecutiveof cerduring thentirepolicyperiodT.hepayrollimitationwilbleproratedbasedonthenumberowfeeksthastuch personswerexecutiveof cersduringthepolicyperiod.

Thisitemincludestate-speci cupdatestoaddressthenationaclhangesand/ortobetterorganizethe staterulesexceptions.

Thisitemalsoincludesvariousformattingandgrammaticaclhanges.

IMP ACT

The impact to overall statewide premium will vary as a result of the changes proposed in this item. Also, for some employers, a negligible premium change may result based on the revised rules. This item proposes changes to NCCI’s Basic Manual that will modernize and clarify rules relevant to current market conditions. As part of NCCI’s continuing effort to simplify and clarify manual rules, we anticipate that these changes will enhance the understanding of NCCI’s Basic Manual.

page4image8000

EXHIBITCOMMENTSANDIMPLEMENT A TIONSUMMARY

T oimplementhisitemt,heattachedexhibitsdetaitlhechangesrequiredinNCCI’s

BasicManual.

T obecomeffectivefornew andrenewaplolicieseffective onandafter12:01a.mo.n October12,017.

page4image10584 page4image11064

Exhibit

ExhibiCtomments

ImplementationSummary

NationaElxhibits

page4image13496 page4image13816

1

D•etailstherevisionstoRule1-B-2-c

R•efertostatexhibiftorTX

A•lsltatexceptionswilclontinuetoapplyunlessotherwise notedinthestate-speci cexhibits

page4image15688

2

D•etailstherevisionstoRules1-B-31,-B-4a,nd1-B-5 T•herevisionstoRules1-B-4and1-B-5-bdonoatpplyinTX R•efertostatexhibitsforFLO,Ra,ndTX

page4image17352

3

D•etailstherevisionstoRule1-C-1

page4image18728

4

D•etailstherevisionstoRules1-C-2-band1-C-2-ja,ndthe establishmenotRfule1-C-2-l

T•herevisionstoRule1-C-2-bdonoatpplyinTX R•efertostatexhibitsforFLT,Xa,ndVA

page4image21552 page4image21712 page4image22192

ThenclosedmaterialsarecopyrightedmaterialsoftheNationaClounciolnCompensationInsuranceI,nc(."NCCI")T.heuseofthesematerials maybegovernedbyaseparatecontractuaalgreementbetweenNCCaInditslicenseesuchasanaf liationagreementbetweenyouandNCCI. UnlesspermittedbyNCCIy,oumaynotcopyc,reatederivativeworks(bywayofexamplec,reateorsupplementyourownworksd,atabases, softwarep,ublicationsm,anualso,rothermaterials)d,isplayp,erformo,rusethematerialsi,nwholeorinparti,nanymediaS.uchactionstaken byouo,rbyourdirectionm,aybeinviolationofederaclopyrightandothercommercialawsN.CCdIoesnotpermitoracquiescesuchuseof itsmaterialsI.ntheventsuchuseiscontemplatedordesiredp,leasecontactNCCI'sLegaDlepartmentforpermission.

©Copyright2016NationaClounciolnCompensationInsuranceI,ncA.lRlightsReserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 5 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

page5image4344
page5image5072

Exhibit

Exhibit Comments

Implementation Summary

page5image7296

5

  • Details the revisions to Rules 1-D-3-f, 1-D-5, and 1-D-6

  • The revisions to Rules 1-D-3-f and 1-D-5 do not apply in TX

  • Refer to state exhibits for CO, MT, TN, and TX

page5image10424

6

  • Details the revisions to Rule 1-F

  • The revisions to Rules 1-F-1 and 1-F-3-a do not apply in VA

  • The revisions to Rule 1-F-3-a and 1-F-3-b do not apply in FL and MO

  • Refer to state exhibits for FL, MO, TX, and VA

  • All state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits

page5image15856 page5image16336

7

  • Details the revisions to Rules 2-A, 2-B, and 2-D

  • The revisions to Rule 2-A do not apply in FL, NV, and TN

  • The revision to Rule 2-B-1-a does not apply in MT

  • The revision to Rule 2-B-1-b does not apply in AK

  • The revision to Rule 2-B-1-c does not apply in OR and TN

  • The revisions to Rule 2-B-1-e do not apply in AR, IL, IN, KS, KY, MD, NM, OK, OR, SD, TN, and UT

  • The revision to Rule 2-B-1-j does not apply in AZ, MT, and NV

  • The revision to Rule 2-B-1-k does not apply in AZ, MT, and NV

  • The revision to Rule 2-B-1-m does not apply in OK

  • The revision to Rule 2-B-1-n does not apply in AK, CO, OR, and VA

  • The revisions to Rule 2-B-1-p do not apply in AZ, MS, NV, and OR

  • The revision to the Rule 2-B-1-p exception does not apply in MT and TX

  • The revisions to Rule 2-B-2-h does not apply in OR

  • The revisions to Rule 2-B-2-l do not apply in NV

  • The revisions to Rule 2-B-2-m do not apply in VA

  • The revisions to Rule 2-D do not apply in MT

  • The revision to Rule 2-D-4 does not apply in NV

  • Refer to state exhibits for AK, AR, AZ, CO, FL, IL, IN, KS, KY, MD, ME, MS, MT, NM, NV, OK, OR, SD, TN, TX, UT, and VA

The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 6 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

page6image4576
page6image5856

Exhibit

Exhibit Comments

Implementation Summary

page6image8080

• All state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits

page6image9672

8

  • Details the revisions to Rules 2-E-1-b and 2-E-1-c

  • The revision to Rule 2-E-1-b(3) does not apply in IA and MO

  • The revisions to Rule 2-E-1-b(4) do not apply in IA

  • The revisions to Rule 2-E-1-c do not apply in TX

  • The revision to Rule 2-E-1-c(2) does not apply in MO

  • Refer to state exhibits for FL, IA, MO, RI, and TX

  • All state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits

page6image15848

State Exhibits

page6image16496 page6image16816

9

Details the revisions to Alaska’s exception to Rule 2-B-1.

page6image18512

10

Details the elimination of Alaska’s exception to Rule 2-B-2.

page6image20208

9

Details the revisions to Arkansas’ exception to Rule 2-B-1-e.

page6image21904

9

Details the revisions to Arizona’s exception to Rule 2-B-1.

page6image23600

9

Details the revisions to Colorado’s exception to Rule 1-D-9.

page6image25296

10

Details the revision to Colorado’s exception to Rule 2-B-1-n.

page6image26992

9

Details the elimination of Florida’s exception to Rule 1-B-3.

page6image28688

10

Details the elimination of Florida’s exception to Rule 1-C-2-j.

page6image30384

11

Details the revisions to Florida’s exception to Rule 1-F.

page6image32080

12

Details the revisions to Florida’s exception to Rule 2-A.

page6image33776

13

Details the revisions to Florida’s exception to Rule 2-E-1-b.

page6image35472

9

Details the revision to Iowa’s exception to Rule 2-E-1-b.

page6image37168

9

Details the elimination of Illinois’ exception to Rule 2-A and the revisions to Illinois’ exception to Rule 2-B.

page6image39328

9

Details the revisions to Indiana’s exceptions to Rule 2-B.

page6image41024

9

Details the revisions to Kansas’s exception to Rule 2-B-1-e.

page6image42720

9

Details the revisions to Kentucky’s exception to Rule 2-B.

page6image44416

9

Details the revisions to Maryland’s exceptions to Rule 2-B.

page6image46432 page6image47232 page6image47392 page6image47712 page6image48192 page6image48512 page6image48672 page6image49152 page6image49312 page6image49632 page6image50112 page6image50272 page6image50752 page6image50912 page6image51232 page6image51552 page6image52032

The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 7 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

page7image4656
page7image6264

Exhibit

Exhibit Comments

Implementation Summary

page7image8488

9

Details the revision to Maine’s exception to Rule 2-B-1-r.

page7image10184

9

Details the revisions to Missouri’s exception to Rule 1-F.

page7image11880

10

Details the revisions to Missouri’s exceptions to Rules 2-E-1-b and 2-E-1-c(2).

page7image13760

9

Details the revision to Mississippi’s exception to Rules 2-B-1-p and the elimination of Mississippi’s exception to Rule 2-B-2-h.

page7image15920

9

Details the revision to Montana’s exception to Rule 1-D-9.

page7image17616

10

Details the revisions to Montana’s exceptions to Rules 2-B-1 and 2-B-2.

page7image19496

9

Details the revisions to New Mexico’s exceptions to Rule 2-B.

page7image21232

9

Details the revisions to Nevada’s exception to Rule 2-A.

page7image22928

10

Details the revisions to Nevada’s exception to Rule 2-B-1.

page7image24624

11

Details the revisions to Nevada’s exception to Rule 2-B-2.

page7image26320

12

Details the revisions to Nevada’s exceptions to Rule 2-D.

page7image28016

9

Details the revisions to Oklahoma’s exceptions to Rule 2-B.

page7image29712

9

Details the elimination of Oregon’s exception to Rule 1-B-4.

page7image31408

10

Details the revisions to Oregon’s exception to Rule 2-B-1.

page7image33104

11

Details the revisions to Oregon’s exception to Rule 2-B-2.

page7image34800

9

Details the revisions to Rhode Island’s exception to Rule 2-E-1-b.

page7image36640

9

Details the revision to South Dakota’s exception to Rule 2-B-2.

page7image38376

9

Details the revisions to Tennessee’s exception to Rule 1-D-3-f.

page7image40072

10

Details the revisions to Tennessee’s exception to Rule 2-A.

page7image41768

11

Details the revisions to Tennessee’s exceptions to Rule 2-B.

page7image43464

9

Details the revisions to Texas’s exception to Rule 1-B-2-c.

page7image45160

10

Details the revisions to Texas’s exceptions to Rules 1-B-3, 1-B-4, and 1-B-5.

page7image47080

11

Details the elimination of Texas’s exception to Rule 1-C-2-j.

page7image48776

12

Details the revision to Texas’s exception to Rules 1-D-5 and the elimination of Texas’s exception to Rule 1-D-9.

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The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 (Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, PAGE 8 KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD,
TN, TX, UT, VA, VT, WV)

FILING MEMORANDUM

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

page8image4352

Exhibit

Exhibit Comments

Implementation Summary

13

Details the revisions to Texas’s exception to Rule 1-F-3-b.

14

Details the elimination of Texas’s exception to Rule 2-A.

15

Details the revision to Texas’s exception to Rule 2-B-1 and the elimination of Texas’s exception to Rule 2-B-2-h.

16

Details the revisions to Texas’s exception to Rule 2-D.

17

Details the revisions to Texas’s exception to Rule 2-E-1-c.

9

Details the revisions to Utah’s exception to Rule 2-B.

9

Details the elimination of Virginia’s exception to Rule 1-C-2-j.

10

Details the revisions to Virginia’s exception to Rule 1-F.

11

Details the revisions to Virginia’s exception to Rule 2-A.

12

Details the revisions to Virginia’s exception to Rule 2-B.

The enclosed materials are copyrighted materials of the National Council on Compensation Insurance, Inc. ("NCCI"). The use of these materials may be governed by a separate contractual agreement between NCCI and its licensees such as an af liation agreement between you and NCCI. Unless permitted by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works, databases, software, publications, manuals, or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or acquiesce such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission.

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 9

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 1
BASIC MANUAL—2001 EDITION
RULE 1—CLASSIFICATION ASSIGNMENT
B. EXPLANATION OF CLASSIFICATIONS
2. Standard Exception Classi cations
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

page9image6144

c.

Salespersons or Collectors—Outside (Code 8742)

(1) This classi cation is assigned to employees who perform these duties away from the employer's premises.

(2) This –co––d–e e––x–lu––d–e–s classi cation is not assigned to employees who:

(a) •– Deliver merchandise.

(b) •– Use vehicles to deliver or pick up goods, even if they collect or sell. These employees must be assigned to the classi cation applicable to the business for drivers.

(c) •– Use public transportation or walk to deliver goods even if they collect or sell. These employees must be assigned to the governing classi cation applicable to the business.

(d) Travel between locations of the employer as district or regional managers to perform various duties not involving outside sales or collection. Refer to Rule 2-G—Interchange of Labor.

(3) Code 8742 does not apply when the basic classi cation wording includes outside salespersons and/or collectors.

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 10

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 2
BASIC MANUAL—2001 EDITION
RULE 1—CLASSIFICATION ASSIGNMENT
B. EXPLANATION OF CLASSIFICATIONS
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)

  1. General Inclusions

    1. Some operations appear to be separate businesses but are included within all basic classi cations. These are called general inclusions. These operations are not separately classi ed. They include the following:

      (1) •– Restaurants or cafeterias, stores, or day care services operated by the –in––s–u–re––d employer for employee use

      Exception:

      If these operations are conducted in connection with construction, erection, lumbering or mining operations, they must be separately classi ed.

      (2) •– Manufacture of containers by the –in––su––re––d employer, such as bags, barrels, bottles, boxes, cans, cartons or packing cases for sole use in the operations insured by the policy

      (3) •– Hospitals or medical facilities operated by the –in––su––re––d employer for its employees
      (4)
      •– Maintenance or repair of the–in––s–u–r–e–d–'–s employer’s buildings or equipment by the–i–n–su––re––d–'–s

      employer’s employees

      (5) •– Printing –o–r –l–i–th––o–g–ra––p–h–in––g by the –in––su––re––d employer on its own products, packaging, brochures, or promotional materials

    2. Some employees may perform general inclusion duties for more than one basic classi cation. In such cases, refer to Rule 2-G for classi cation treatment.

      E–x––c–ep––t–io–n–s––:

    3. A general inclusion operation must be separately classi ed if any of the following conditions apply: (1) •– The operation is conducted as a separate and distinct business of the –in––su––re––d employer

      (refer to Rule 1-D-3)–.

      (2) •– The operation is speci cally excluded in the wording of the basic classi cation–. (3) •– The principal business is described by a standard exception classi cation–.

    Refer to NCCI’s User's Guide for an example.

  2. General Exclusions

    Some operations in a business are so unusual for the type of business described by the applicable basic classi cation, that they are separately classi ed even though the operations are not conducted as a secondary business. These are called general exclusions. They are:

    1. •– Aviation—all operations of the ying and ground crews

    2. •– New construction or alterations

    3. •– Stevedoring

    4. •– Sawmill operations

      •– E–m–p––lo––ye––r–-o––p–e–ra––te––d d––a–y –ca––re– –se––r–v–i–ce–

    Refer to NCCI’s User's Guide for an example.

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 11

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 2 (CONT'D)
BASIC MANUAL—2001 EDITION
RULE 1—CLASSIFICATION ASSIGNMENT
B. EXPLANATION OF CLASSIFICATIONS
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)

5. Governing Classi cation

a. The G–governing C–classi cation at a speci c job or location is the basic classi cation, other than a standard exception classi cation–, –th––a–t p––ro––d–u–ce––s –th––e g––re––a–te––s–t a–m– o––u–n–t o––f p––a–y–ro––l–l.

The governing classi cation is determined in accordance with the Governing Classi cation Determination Table.

Governing Classi cation Determination Table

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If . . .

Then the governing classi cation is the. . .

A basic classi cation produces the greatest amount of payroll

Basic classi cation

A basic classi cation is applicable but no payroll is assigned

Multiple basic classi cations apply

Basic classi cation that is assigned the greatest amount of payroll

Multiple basic classi cations apply but no payroll is assigned to any of the basic classi cations

Basic classi cation that is the highest rated classi cation

A basic classi cation is not applicable

Standard exception classi cation that is assigned the greatest amount of payroll

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–I–f a– b––a–s–i–c –c–la––s–s–i– –ca––t–io––n –i–s n––o–t a––p–p–l–i–ca––b–le––, –th––e g––o–ve––rn––in––g –c–la––s–s–i– –ca––t–io––n –i–s –th––e –s–ta––n–d–a–rd– e––x–ce––p–t–io––n –c–la––s–s–i– –ca––t–io––n –th––a–t p––ro––d–u–ce––s –th––e g––re––a–te––s–t a–m– o––u–n–t o––f p––a–y–ro––l–l–.

b. The governing classi cation is used to determine the classi cation treatment of:

  • Miscellaneous employees

  • Local managers

  • Executive of cers who regularly engage in duties that are ordinarily performed by a superintendent, foreperson or worker

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 12

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 3
BASIC MANUAL—2001 EDITION
RULE 1—CLASSIFICATION ASSIGNMENT
C. CLASSIFICATION WORDING
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)

1. Classi cation Captions and Notes

The caption is the heading or title of –th––a–t p––re––ce––d–e–s the classi cation –i–t–se––l–f a––n–d –i–s p––a–r–t o––f –th––e –c–la––s–s–i– –ca––t–io––n w– o– –r d– –i n– –g .

The note is the phrase that follows the caption–c–la––s–s–i– –c–a–t–i–o–n a––n–d–i–s p––a–r–t –o–f–th––e –c–la––s–s–i– –c–a–t–io––n w–o––rd––in––g.
The classi cation wording as a whole, including the caption–s and note–s, controls, restricts, or explains the

classi cation usage. This wording is also referred to as the “phraseology.”

Refer to NCCI’s User's Guide for an example.

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 13

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 4
BASIC MANUAL—2001 EDITION
RULE 1—CLASSIFICATION ASSIGNMENT
C. CLASSIFICATION WORDING
2. Words and Phrases
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)

b. Clerical

Clerical means –c–le––r–i–ca––l of ce employees and telecommuters a––n–d d––ra––f–t–in––g e–m– p––lo––ye––e–s as de ned in Rule 1-B-2-a.

C––le––r–i–ca––l –in––c–lu––d–e–s –c–le––r–i–ca––l –te––le––co–m– m– u––te––r–s a––s d––e– n––e–d –in– R– u––le– 1––-B––-2––-a––.

j. Stories in Height

Certain classi cation wording refers to “stories in height.” A story is de ned as – –f–te––e–n –(15–) feet in height. It is measured from the lowest point above ground level to the highest point above ground level. S–o–m–e–
o––f –th––e–se– –c–la––s–s–i– –ca––t–io––n–s a––re––:

  • C–o––d–e 5––0–3–7—– P–a––in––t–in––g–:M–e––ta––l S––t–ru––c–t–u–r–e–s—– O––v–e–r T–w––o S––to––r–ie––s

  • C– –o–d–e –5–0–5–9—– –I–ro––n –o–r S––t–e–e–l—– E––re––c–t–io––n—– F––ra–m– e– S––t–ru––c–tu––r–e–s N– o––t O– –ve––r T–w– o– S––to––r–ie––s

  • C–o––d–e 5––6–4–5—– C––a–r–p–e–n–t–r–y—– C–o––n–s–t–ru––c–t–i–o–n o––f R–e––s–i–d–e–n–t–i–a–l D–w–e––l–l–in––g–s N–o––t E––x–ce––e–d–in––g T–h––r–e–e S––t–o–r–ie––s–in– H–e––i–g–h–t

  • C––o–d–e –5–4–0–3—– C–a––rp––e–n–t–r–y—– C–o––n–s–t–r–u–c–t–i–o–n o––f R–e––s–id––e–n–t–i–a–l D–w––e–l–l–in––g–s E––x–ce––e–d–in––g T–h––re––e S––t–o–r–ie––s–in– H–e––ig––h–t o––r C–o–m–m–e––r–c–ia––l B–u––i–ld––in––g–s a––n–d S––t–ru––c–tu––re––s

l. Separate and Distinct Business

Separate and distinct business means an additional operation of the employer that is not included in the basic classi cation on the policy. Refer to the following:

  • Rule 1-D-3 for the assignment of more than one basic classi cation

  • Rule 3-A-5 for the combination of legal entities, locations, and operations on a single policy

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NA TIONALCOUNCILONCOMPENSA TIONINSURANCEI,NC.

ITEMB-1433—REVISIONSTOBASICMANUALRULE1—CLASSIFICA TIONASSIGNMENT ANDRULE2—PREMIUMBASISANDP A YROLLALLOCA TION

EXHIBIT5 BASICMANUAL—2001EDITION

RULE1–CLASSIFICA TIONASSIGNMENT DC.LASSIFICATIONPROCEDURES

(AppliesinA:KA,LA,RA,ZC,OC,TD,CF,LG,AH,II,AI,DI,LI,NK,SK,YL,AM,DM,EM,O, MSM,TN,EN,HN,MN,VO,KO,RR,IS,CS,DT,NT,XU,TV,AV,TW,V)

3A.ssignmentofMoreThanOneBasicClassi cation

B-1433 P AGE14

page14image3648

Morethanonebasiclassi cationmaybeassignedtoani –n –s –u –r –e –d –w –h –o –empmloyeerthscaotnditionsa, b,orcbelowO.perationmeansactivities,enterprises,processes,secondarybusinessesorundertakings.

f. EmployeeLeasingFirms L,aborContractorsP,rofessionaElmployerOrganizations, and T emporaryLaborServices

(1)Workersassignedtoclientsmusbteclassi edthesameasdirecetmployeesotfheclient performingthesameorsimilarduties.

(2)Itfheclienhtasnodirecetmployeesperformingthesameorsimilardutiesl,easedemployees areclassi edasitfheyweredirecetmployeesotfheclienetntity.

RefertoNCCI’s User'sGuide foranexample. 5B.usinessesDescribedbyaStandardExceptionClassi cation

ItfheprincipablusinessisdescribedbyaS –s tandardE –exceptionC –lcassi cationt,heoperationsoafll employeesnoitncludedinthede nitionoSf –s tandardE –exceptionC –lcassi cationmusbteassignedtothe separatebasiclassi cationthamtosctloselydescribestheiroperation.

Thisruleappliestobothanemployer’sbusinesswithinastateandtoindividuajlobsorlocationswhere thegoverningclassi cationisdescribedbyastandardexceptionclassi cation.

RefertoNCCI’s User'sGuide foranexample. 6C.lassi cationsLimitedtoSeparateandDistinct page14image8456Businesses

Theassignmenot cfertainclassi cationsislimitedbytheirclassi cation notestoseparateandistinct businesses.b–e–c–ahen–outes–msay–des–ctri–bTeanoperationthaftrequentlyisanintegraplarotaf businessdescribedbyanotherclassi cation.

RefertoNCCI’s User'sGuide foranexample.

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©Copyright2016NationaClounciolnCompensationInsuranceI,ncA.lRlightsReserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 15

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 6
BASIC MANUAL—2001 EDITION
RULE 1—CLASSIFICATION ASSIGNMENT
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IN, KS, KY, LA, MD, ME, MS, MT, NE, NH, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

page15image5600

F.

CHANGES OR CORRECTIONS IN CLASSIFICATIONS

  1. Changes in classi cation due to changes in an–in––su––re––d–'–s employer’s operations will be applied as of the date the change in operations occurred.

  2. Corrections in classi cations that result in a decrease in premium, whether determined during the policy period or at audit, must be applied retroactively to the inception of the policy.

  3. Corrections in classi cations that result in an increase in premium–, must be applied as follows:

page15image10336

If the correction in classi cation is effective . ..

Then the correction is applied . . .

During the rst 120 days of the policy term . . .

Retroactively to the inception of the policy.

After the rst 120 days of the policy term, but before the nal 90 days . . .

As of the date the company discovers the cause for that correction.

During the last 90 days of the policy term . . .

Only to a renewal policy, if any.

page15image20712 page15image21776

The effective date of change, for purposes of the time periods noted in the table above, is the date a carrier applies a classi cation change.

Exceptions to the table above:

a. If the correction in classi cation is the result of a misrepresentation or omission by the –in––su––re––d employer, its agents, employees, of cers, or directors, then the correction must be applied from the date on which the change would have applied if such misrepresentation omission had not been made.

b. The above rules do not apply to the following types of operations; therefore, classi cations are assigned and applied at any time during the term of the policy or at audit:

  • Construction or erection –r–i–s–k–s

  • Employee leasing – –rm– –s

  • Labor –co––n–t–ra––c–to––r–s contracting

  • Temporary labor services

  • Professional employer organizations (PEOs)

  • Operations assigned to standard exception classi cations

  • General exclusions

4. For purposes of Rule 1-F the reallocation of payroll among classi cations on the policy is not considered a change or correction in classi cation(s).

Refer to NCCI’s User's Guide for an example.

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 16

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 7
BASIC MANUAL—2001 EDITION
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

A. PREMIUM BASIS

Premium is calculated on the basis of the total payroll paid or payable by the –in––su––re––d employer for services of –in––d–i–v–id––u–a–l–s employees who could receive workers compensation bene ts for work-related injuries as provided by the policy. Some classi cations may have a different premium basis; refer to NCCI’s User’s Guide for examples.

E–x––c–ep––t–io–n–s–:

P––re–m––iu–m– –fo––r d––om–e––s–t–i–c w–o––r–ke––r –c–la––s–s–i– –ca––t–io––n–s–i–s –ca––l–cu––la––te––d o––n a– p––e–r –ca––p–i–ta– b––a–s–i–s–in––s–te––a–d o––f p––a–y–ro––l–l–. D–o–m–e––s–t–i–c w–o––r–ke––r–s a––re– e–m–p––lo––ye––e–s w–h––o p––e–r–fo––rm– h––o–u–se––h–o–ld– d––u–t–ie––s–. R–e––fe––r–to– R–u––le– 3––-C––.

A– p––e–r –ca––p–i–ta– –c–la––s–s–i– –ca––t–io––n u––se––s –th––e n––um– b––e–r o––f w– o––r–ke––r–s –ra––th––e–r –th––a–n p––a–y–ro––l–l –to– m– e––a–su––re– e––xp––o–su––re––.

B. PAYROLL

For purposes of this manual, the terms “payroll” and “remuneration” mean–s money or substitutes for money.

1. Includes:

  1. Wages or salaries (including retroactive wages or salaries). Refer to NCCI’s User’s Guide for examples.

  2. Total –ca––sh– pay received by an employee for commissions and draws against commissions.

  3. Bonuses including stock bonus plans. –(Refer to Rule 2-D for payroll limitation rules.–)

  4. Extra pay for overtime work except as provided in Rule 2-C-2.

  5. Pay for holidays, vacations, or periods of sickness. –(Refer to Rule 2-G-3 for allocation of payroll for employees subject to more than one classi cation code.–)

  6. Payment by an employer of amounts that would have been withheld from employees to meet statutory obligations for insurance or pension plans such as the Federal Social Security Act or Medicare.

  7. Payment to employees on any basis other than time worked, such as piecework, pro t sharing or incentive plans.

  8. P–a––ym–e––n–t o––r a––l–lo–w–a––n–ce––s–fo––r h––a–n–d–to––o–l–s o––r h––a–n–d–-h––e–ld– p––ow–e––r–to––o–l–s u––se––d b––y e–m–p––lo––ye––e–s–in––th––e–i–r w–o––r–k o––r o––p–e–r–a–t–io––n–s –fo––r –th––e –in––su––re––d–. T–h––e–se– –to––o–l–s m– a––y b––e –su––p–p–l–ie––d d––i–re––c–t–l–y b––y –th––e e–m– p––lo––ye––e o––r –to– –t–h–e e–m– p––lo––ye––e –th––ro––u–g–h a– –th––i–rd– –p–a–r–t–y–. (RESERVED FOR FUTURE USE.)

  9. The rental value of an apartment or house provided to an employee based on comparable accommodations.

  10. The value of lodging, other than an apartment or house received by an employee as part of their pay to the extent shown in the–in––su––re––d–'–s employer’s records.

  11. The value of meals received by employees as part of their pay to the extent shown in the –in––su––re––d–'–s employer’s records.

l. The value of store certi cates, merchandise, credits or any other substitute for money received by employees as part of their pay.

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 17

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 7 (CONT'D)
BASIC MANUAL—2001 EDITION
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

m. Payments for salary reduction, employee savings plans, retirement or cafeteria plans
(IRC 125), health savings accounts, and exible spending accounts that are made through employee-authorized salary reductions from the employee's gross pay.
Refer to NCCI’s User’s Guide for an example.

  1. Davis-Bacon wages or wages from a similar prevailing wage law. Refer to NCCI’s User’s Guide for an example.

  2. Annuity plans.

  3. Expense reimbursements to employees –to– –th––e e––x–te––n–t –t–h–a–t –a–n if the employer's records do not con rm that the expense was incurred as a valid business expense. Refer to Rule 2-B-2-h for contractual allowable travel expenses.

    Exception:

    When it can be veri ed that the employee was away from home overnight on the business
    of the employer, but the employer did not maintain veri able receipts for incurred expenses,
    a reasonable expense allowance is permitted to be excluded. The allowance is limited to a maximum of $––3–0 $75 per day–, –i–s p––e–rm––i–t–te––d. The remaining non-veri able expenses are included as payroll.

    Refer to Rule 2-B-2-h for additional information about exclusion of expense reimbursements.

  4. Payment for lming of commercials excluding subsequent residuals that are earned by the commercial's participant(s) each time the commercial appears in p––r–in––t o––r –i–s b––ro––a–d–ca––s–t any type of media.

  5. Adjustments made by the employer to raise employees’ wages to federal, state, or local minimum wage, whichever is applicable.

2. Excludes:

  1. Tips or other gratuities received by employees.

  2. Payments by an employer to group insurance or group pension plans for employees, other than those covered by Rule 2-B-1-f and Rule 2-B-1-m.

  3. Payments by an employer into third-party trusts for the Davis-Bacon Act or a similar prevailing wage law provided the pension trust is quali ed under IRC Sections 401(a) and 501(a).

  4. The value of special rewards for individual invention or discovery.

  5. Dismissal or severance payments except for time worked or vacation accrued.

  6. Payments for active military duty.

  7. Employee discounts on goods purchased from the employee's employer.

  8. Expense reimbursements to employees –to– –t–h–e e––x–te––n–t –t–h–a–t –a–n if the employer's records con rm that the expense was incurred as a valid business expense.

    Reimbursed expenses and at expense allowances –(e––x–ce––p–t –fo––r h––a–n–d o––r h––a–n–d–-h––e–ld– p––ow– e––r –to––o–l–s–) paid to employees may be excluded from the audit only if all three of the following conditions are met:

    (1) The expenses or allowances are incurred for the business of the employer

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 18

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 7 (CONT'D)
BASIC MANUAL—2001 EDITION
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

(2) The amount of each employee's expense p––a–ym– e––n–t–s or allowance–s a––re– is shown separately in the records of the employer

(3) The amount of –e–a–ch– –em– –p–l–o–y–e–e–'–s the expense –re––im– –b–u–r–se–m– –e–n–t or allowance approximates –i–s a– –f–a–i–r e––s–t–im– a––te– o––f the actual expense–s incurred by the employee in the conduct of h––i–s–/h––e–r their work

Refer to NCCI’s User's Guide for an example.

Note: W– h––e–n –i–t –ca––n b––e –v–e–r–i– e––d –t–h–a–t –th––e e–m– p––lo––y–e–e w– –a–s –aw– –a–y –f–r–om– –h–om– e– o––ve––r–n–i–g–h–t –o–n –th––e b––u–s–in––e–s–s o––f –th––e e–m– –p–l–o–y–e–r–, –b–u–t –t–h–e –em– p––lo––ye––r d––id– n––o–t m– a––in––t–a–i–n –v–e–r–i– a––b–le– –re––ce––ip––t–s –fo––r –i–n–cu––r–re––d e––x–p–e–n–s–e–s–, a– –re––a–so––n–a–b–le– e––xp––e–n–s–e –a–l–l–ow– –a–n–ce––, –l–im––i–te––d –to– a– m– a––x–im– –um– o––f $––3–0 –p–e–r –d–a–y–, –i–s p––e–rm––i–t–te––d–. If an employer did not maintain veri able receipts for incurred expenses for an employee that was away from home overnight on the business of an employer a maximum expense allowance is permitted to be excluded. Refer to Rule 2-B-1-p Exception for the maximum employee expense allowance.

Allowable travel expenses permitted by any contract with a federal, state, or local government entity, including, but not limited to, a city, borough, or village, are excluded from payroll. In lieu of veri able receipts for incurred expenses, the employer must produce a copy of the contract provision permitting the travel expenses at audit. The allowable travel expenses must be in addition to the current wage of the employee.

  1. S–u––p–p–e–r Meal money for late work.

  2. Work uniform allowances.

  3. Sick pay paid to an employee by a third party such as an–in––s–u–re––d–'–s employer’s group insurance carrier that is paying disability income bene ts to a disabled employee.

  4. Employer-provided perks such as:

    • Use of company-provided automobiles

    • Airplane ights

    • Incentive vacations (e.g., contest winners)

    • Discounts on property or services

    • Club memberships

    • Tickets to entertainment events

    • Educational assistance

    • Relocation and moving expenses

      m. Employer contributions to employee bene t plans such as:

    • Employee savings plans

    • Retirement plans

    • Cafeteria plans (IRC 125)

    • Health savings accounts

    • Flexible spending accounts

      These include contributions made by the employer, at the employer's expense, which are determined by the amount contributed by the employee.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 19

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 7 (CONT'D)
BASIC MANUAL—2001 EDITION
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

D. PAYROLL LIMITATIONS

1. P–a––y–ro––l–l–l–im––i–ta––t–io––n a––p–p–l–ie––s a––f–te––r a––n–y d––e–d–u–c–t–io––n–s o––f e––x–t–ra– p––a–y–fo––r o––ve––r–t–im–e––. P–a––r–t–ia––l w–e––e–k–s a––re– –co––n–s–id––e–re––d –fu––l–l w–e––e–k–s w–h––e–n d––e–te––rm––in––in––g a––ve––ra––g–e w–e––e–k–l–y p––a–y–. T–o––ta––l–t–im–e– o––f a––n–y w–o––r–ke––r e–m–p––lo––ye––d d––u–r–in––g–th––e

p––o–l–i–c–y p––e–r–io––d –i–s –th––e –su–m– o––f –th––e p––o–r–t–io––n–s o––f a––l–l –ve––rb––a–l o––r w––r–i–t–te––n a––g–re––em– e––n–t–s w––i–th– –th––a–t e–m– p––lo––ye––e –th––a–t –fa––l–l w––i–th––in– –th––e p––o–l–i–c–y p––e–r–io––d–.

  1. 2––. Speci c limitations may apply to:

    1. •–Pp–ayroll for E–executive O–of cers, members of limited liability companies, partners, and sole proprietors a––n–d –to–

    2. •–C–classi cations with notes that indicate payroll limitations

    Refer to:

    • National and state special Classi cations sections for details

    • R–e––fe––r–to– S–state pages for speci c limitations–.

    • Rule 2-E-1-b for additional information regarding executive of cer payroll limitations

  2. Payroll limitations apply after any exclusions of extra pay for overtime; refer to Rule 2-C-2-a.

  3. Payroll used to calculate premium must exclude that part of the employee's average weekly pay that

    exceeds the applicable weekly limitation, provided:

    1. •–Books and records are maintained to show separately that the total payroll earned by each employee is in excess of the weekly payroll limitation for the total time employed during the policy period, and

    2. •–Separate records are maintained, in summary, by classi cation for such employees

For more information on payroll, refer to Rule 2-B.

  1. Partial weeks are considered full weeks when determining average weekly pay. Total time of any worker employed during the policy period is the sum of the portions of all verbal or written agreements with that employee that fall within the policy period.

  2. B–o––n–u–se––s—– For purposes of applying the payroll limitation rule, bonuses paid during the policy term must be earned during the policy term. a––n–d They are prorated for the period of employment during the policy term to determine the average weekly bonus to be added to the average weekly pay.

    For additional information on bonuses, refer to Rule 2-B-1-c –re––g–a–rd––in––g E––xe––c–u–t–i–v–e O––f– –ce––r p––a–y–ro––l–l –l–im––i–ta––t–io––n–s–, –re––fe––r –to– R– u––le– 2––-E––-1––-b–.

    Refer to NCCI’s User's Guide for an example.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 20

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 8
BASIC MANUAL—2001 EDITION
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
E. EXECUTIVE OFFICERS, MEMBERS OF LIMITED LIABILITY COMPANIES, PARTNERS, AND SOLE PROPRIETORS
1. Executive Of cers
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

  1. Premium Determination

    Premium for executive of cers is based on their total payroll, subject to the following limitations and the requirements of Rule 2-D:

    (1) The minimum individual payroll for an executive of cer is shown on the individual state pages in the Basic Manual.

    (2) The maximum individual payroll for an executive of cer is shown on the individual state pages in the Basic Manual.

    (3) The payroll limitations in b(1) and b(2) apply to the average weekly payroll of each executive of cer for the number of weeks the of cer was employed during the policy period.

    When an individual is not an executive of cer for the entire policy period, the payroll limitation is prorated based on the number of weeks that the individual was an executive of cer.

    (4) Payroll is subject to minimum and maximum limitations and included when one of the following apply:–. –. –.

    (a) •–The executive of cer does not perform any duties but frequently visits the premises.

    (b) •–The executive of cer frequently visits the premises of the –r–i–s–k employer for business conferences, directors' meetings, or similar duties, even if the of cer is an employee or of cer of another –r–i–s–k employer in the operations of which he/she takes an active interest.

    (c) •–The of cer receives no salary; however, a regular salary is credited to him or her on the books. In this instance the amount credited must be included in payroll.

    (d) •–The of cer receives no salary, either drawn or credited, or the audit records fail to disclose the salary. In this instance the amount to be included in the payroll is the applicable minimum per Rule 2-D.

    (5) Payroll is excluded when:–. –. –.
    (a)
    •–The executive of cer is elected for the value of his/her name or because of stock holdings, has

    no duties, and does not visit the premises, except perhaps to attend directors' meetings, or–.

    (b) •–The executive of cer ceases to perform any duties and does not visit the premises, except perhaps to attend directors' meetings.

    For the applicable state weekly minimum and maximum individual payroll limitation formula, refer to Appendix F.

  2. Executive Of cers Performing Flight Duties

    Payroll of an executive of cer who is a pilot or member of the ying crew of an aircraft used in the –in––su––re––d–'–s employer’s business must be assigned as follows:

    (1) For each week that the executive of cer did not perform ight duties, assign the executive of cer's payroll to the classi cation that applies to the principal operations in which the executive of cer is engaged.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 21

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 8 (CONT'D)
BASIC MANUAL—2001 EDITION
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
E. EXECUTIVE OFFICERS, MEMBERS OF LIMITED LIABILITY COMPANIES, PARTNERS, AND SOLE PROPRIETORS
1. Executive Of cers
(Applies in: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WV)
(Exhibit comment: All current state exceptions will continue to apply unless otherwise noted in the state-speci c exhibits)

(2) For each week that the executive of cer performed ight duties, assign the of cer's payroll for that week to C–o––d–e 7––4–2–1—– the appropriate A–aviation—F–flying C–crew classi cation. However, if the executive of cer's non ying duties in that week are subject to a higher rated classi cation, assign that higher rated classi cation for that week.

Note: The above rules apply on the basis of the pilot's logbook, which is required under federal regulations, or on the basis of veri able records.

(3) If an C–o––d–e 7––4–2–1—– A–aviation—F–flying C–crew classi cation applies and veri able records are not kept to indicate those weeks during which ying is performed by the executive of cer, assign the executive of cer's payroll to the highest rated classi cation that applies to any of their duties.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 61

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 9
BASIC MANUAL—2001 EDITION TEXAS RULE EXCEPTIONS
RULE 1—CLASSIFICATION ASSIGNMENT B. EXPLANATION OF CLASSIFICATIONS 2. Standard Exception Classi cations

c. Salespersons–,or Collectors o––r M–e––ss–e–n–g––e–rs–—Outside (Code 8742)

Change Rule 1-B-2-c(3) as follows:

T–h––i–s –c–l–a–s–s–i– –ca––t–io––n–i–s –a–s–s–ig––n–e–d–to– e–m––p–lo––ye––e–s w–h––o p––e–r–fo––rm– –th––e–se– –d–u–t–ie––s a–w–a––y–f–r–om– –t–h–e –em––p–lo––ye––r–’–s p––re–m––i–se––s–.

T––h–i–s –co––d–e e––x–c–lu––d–e–s e–m–p––lo––ye––e–s w––h–o–: •– D–e––l–i–ve––r m–e––r–c–h–a–n–d–i–s–e–.

•– U––se– –ve––h–i–c–l–e–s –t–o d––e–l–i–ve––r o––r –p–i–c–k –u–p g––o–o–d–s–, –e–v–e–n –i–f –t–h–e–y –c–o–l–l–e–c–t o––r –se––l–l–. T–h––e–se– –em– –p–l–o–ye––e–s m– –u–s–t –b–e –a–s–s–i–g–n–e–d –t–o –t–h–e –c–l–a–s–s–i– –c–a–t–io––n –a–p–p–l–i–ca––b–le– –to– –th––e b––u–s–i–n–e–s–s –fo––r d––r–i–v–e–r–s–.

•– U––se– –p–u–b–l–i–c–t–ra––n–sp––o–r–ta––t–io––n o––r w–a––l–k–to– d––e–l–i–v–e–r –g–o–o–d–s e––ve––n–i–f–th––e–y –co––l–le––c–t –o–r –s–e–l–l–. T–h––e–s–e e–m–p––l–o–ye––e–s m– –u–s–t –b–e a––s–s–i–g–n–e–d –to– –th––e g––o–v–e–r–n–in––g –c–la––s–s–i– –ca––t–io––n a––p–p–l–i–ca––b–le– –to– –th––e b––u–s–in––e–s–s–.

(3) Code 8742 does not apply when the basic classi cation wording includes outside salespersons, collectors, or messengers.

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 62

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 10
BASIC MANUAL—2001 EDITION TEXAS RULE EXCEPTIONS
RULE 1—CLASSIFICATION ASSIGNMENT B. EXPLANATION OF CLASSIFICATIONS

  1. General Inclusions

    A–d––d –th––e –fo––l–lo–w––in––g –to– R–u––le– 1––-B––-3––:

    •–A––i–r–c–ra––f–t–t–ra––ve––l b––y e–m–p––lo––ye––e–s–, o––th––e–r–th––a–n m–e–m–b––e–r–s o––f–th––e – –y–in––g –c–re–w––,–in––c–lu––d–in––g e–m–p––lo––ye––e–s w–h––o–se– p––a–y–ro––l–l –i–s a––s–s–ig––n–e–d –to– –th––e –s–ta––n–d–a–rd– e––x–ce––p–t–io––n –c–la––s–s–i– –ca––t–io––n–s–.

    Change –th––e E––x–ce––p–t–io––n–s –to– Rule 1-B-3-c(3) as follows:

    E–x––c–ep––t–io–n–s––:

    c. A– g––e–n–e–ra––l –in––c–lu––s–io––n o––p–e–ra––t–io––n m– u––s–t b––e –se––p–a–ra––te––l–y –c–la––s–s–i– e––d –i–f a––n–y o––f –th––e –fo––l–lo–w––in––g –co––n–d–i–t–io––n–s a––p–p–l–y–:
    •– T– h– –e o– –p –e –r a– –t –i o– –n –i –s –c o– –n –d –u –c –t e– –d a– –s a– –s e– –p –a –r a– –t e– a– –n –d d– –i –s –t –i n– –c –t b– –u –s –i n– –e –s –s o– –f –t h– –e –i n– –s u– –r e– –d –( –r e– –f e– –r –t o– R– u– –l e– 1– –- D– –- 3– –) •–T–h––e o––p–e–ra––t–io––n–i–s –sp––e–c–i– –ca––l–l–y e––x–c–lu––d–e–d–in––th––e w–o––rd––in––g o––f–th––e b––a–s–i–c –c–la––s–s–i– –ca––t–io––n

    (3) •–The primary business is described by a standard exception classi cation

  2. General Exclusions

    Change Rule 1-B-4 as follows:

    Some operations in a business are so unusual for the type of business described by the applicable basic classi cation, that they are separately classi ed even though the operations are not conducted as a secondary business. These are called general exclusions. They are:

    1. •–Aviation—All Operations of the Flying Crew. The payroll of any employees who, as part of their duties operate an aircraft as a member of the ying crew, but who are normally engaged in other duties, must be assigned to the classi cation describing their normal operations except for days on which they y. For each such day, their payroll computed on the basis of 300 days a year must be assigned to the appropriate aircraft operation classi cation.

    2. •–New Construction or Alterations by the insured’s employees on the employer’s premises

    3. •–Stevedoring, including tallying and checking incidental to stevedoring

    4. •–Sawmill Operations

    General exclusions must be separately classi ed:

    • Unless speci cally included in a classi cation assigned to the business

    • Even if the basic classi cation includes phrases such as “all employees” or “all operations”

  3. Governing Classi cation

    Change Rule 1-B-5-b as follows:

    T–h––e g––o–ve––rn––in––g –c–la––s–s–i– –ca––t–io––n a––t a– –sp––e–c–i– –c –jo––b o––r –lo––ca––t–io––n –i–s –th––e –c–la––s–s–i– –ca––t–io––n–, o––th––e–r –th––a–n a– –s–ta––n–d–a–rd– e––x–ce––p–t–io––n –c–la––s–s–i– –ca––t–io––n–, –th––a–t p––ro––d–u–ce––s –th––e g––re––a–te––s–t a–m– o––u–n–t o––f p––a–y–ro––l–l–.

    –I–f a– b––a–s–i–c –c–la––s–s–i– –ca––t–io––n –i–s n––o–t a––p–p–l–i–ca––b–le––, –th––e g––o–ve––rn––in––g –c–la––s–s–i– –ca––t–io––n –i–s –th––e –s–ta––n–d–a–rd– e––x–ce––p–t–io––n –c–la––s–s–i– –ca––t–io––n –th––a–t p––ro––d–u–ce––s –th––e g––re––a–te––s–t a–m– o––u–n–t o––f p––a–y–ro––l–l–.

    b. The governing classi cation is used to determine the classi cation treatment of miscellaneous employees.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 63

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 11
BASIC MANUAL—2001 EDITION TEXAS RULE EXCEPTIONS
RULE 1—CLASSIFICATION ASSIGNMENT C. CLASSIFICATION WORDING
2. Words and Phrases

j. S––to––r–ie––s–in– H–e––ig–h––t

C–h––a–n–g–e R–u––le– 1––-C––-2––-–j a––s–fo––l–lo–w––s–:

C– e––r–ta––in– –c–la––s–s–i– –ca––t–i–o–n w– –o–rd––i–n–g –re––fe––r–s –to– –“–s–to––r–ie––s –i–n –h–e–i–g–h–t–.–” A– –s–t–o–r–y –i–s –d–e– –n–e–d –a–s –t–h–e –sp––a–ce– –in– a– –b–u–i–ld––in––g b––e–tw–e––e–n–tw––o–a–d–ja––ce––n–t– o––o–r–le––ve––l–so––rb––e–tw–e––e–na–– o––o–ra––n–d–th––e–ro––o–f–. S–o–m–e–o––f–th––e–se––c–la––s–s–i– –ca––t–io––n–sa––r–e–:

  • 5––2–1–3—– C–o––n–c–r–e–t–e C––o–n–s–t–ru––c–t–io––n—– E––re––c–t–io––n o––f P––re––ca––s–t a––n–d P––r–e–s–t–r–e–s–se––d S––t–ru––c–tu––ra––l C–o––n–c–re––te– P––ro––d–u–c–t–s o––r T– –i –l –t –- U– p– W– a– –l –l S– e– –c –t –i o– –n –s —– B– u– –i –l d– –i n– –g –s O– n– –e a– –n –d T– w– o– S– –t o– –r –i e– –s –i n– H– e– –i g– –h –t &– D– –r –i –v e– –r –s

  • 5––0–4–0—– C–o––n–c–re––te– C–o––n–s–t–ru––c–t–io––n—– E––r–e–c–t–io––n o––f P––re––ca––s–t –a–n–d P––re––s–t–r–e–s–s–e–d S––t–ru––c–tu––r–a–l C–o––n–c–re––te– P––ro––d–u–c–t–s o––r T––i–l–t–-U–p– W–a––l–l S––e–c–t–io––n–s—–B–u––i–ld––in––g–s O––ve––r T–w–o– S––to––r–ie––s–in– H–e––ig––h–t

  • 5––0–7–0—––I–ro––n o––r S––te––e–l—– E––re––c–t–io––n—– D–w–e––l–l–in––g–s N–o––t O––ve––r T–h––re––e S––to––r–ie––s–in– H–e––ig––h–t

  • 9––1–7–0—– W––in––d–ow– C––le––a–n–in––g—– E––x–te––r–io––r—– B–u––i–ld––in––g–s O––ve––r T–w–o– S––to––r–ie––s–in– H–e––ig––h–t &– D––r–i–ve––r–s

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 64

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 12
BASIC MANUAL—2001 EDITION TEXAS RULE EXCEPTIONS
RULE 1—CLASSIFICATION ASSIGNMENT D. CLASSIFICATION PROCEDURES

5. Businesses Described by a Standard Exception Classi cation

Change Rule 1-D-5 as follows:

If the primary business is described by a S–standard E–exception C–classi cation, the operations of all employees not included in the de nition of S–standard E–exception C–classi cation must be assigned to the separate basic classi cation that most closely describes the employer’s operation.

This rule applies to both an employer’s overall business and to individual jobs or locations where the governing classi cation is described by a standard exception classi cation.

A–d––d –th––e –fo––l–l–ow––in––g –to– R––u–l–e 1––-D––:

9. G–e–n––e–ra––l E–x––c–lu–s––io–n–s–

G– e––n–e–ra––l E––x–c–l–u–s–i–o–n–s m– u––s–t –b–e –se––p–a–ra––te––l–y –c–l–a–s–s–i– e––d –u–n–le––s–s –sp––e–c–i– –ca––l–l–y –i–n–c–lu––d–e–d –in– –a –c–la––s–s–i– –c–a–t–i–o–n a––s–s–ig––n–e–d –to– –th––e b––u–s–i–n–e–s–s–.

G– e––n–e–ra––l E––x–c–lu––s–i–o–n–s m– u––s–t b––e –se––p–a–ra––te––l–y –c–l–a–s–s–i– –e–d e––v–e–n –i–f –th––e b––a–s–i–c –c–la––s–s–i– –ca––t–io––n –in––c–lu––d–e–s p––h–ra––se––s –su––ch– a––s –“a––l–l e–m– p––lo––ye––e–s–” o––r –“a––l–l o––p–e–ra––t–io––n–s–.–”

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 65

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 13
BASIC MANUAL—2001 EDITION TEXAS RULE EXCEPTIONS
RULE 1—CLASSIFICATION ASSIGNMENT

F. CHANGES OR CORRECTIONS IN CLASSIFICATIONS

C–h––a–n–g–e Add the following to Rule 1-F-3-b a––s–f–o–l–l–ow––s:

T––h–e a––b–o–v–e –r–u–le––s d––o –n–o–t –a–p–p–l–y –to– –th––e –fo––l–lo–w––i–n–g –t–yp––e–s –o–f –o–p–e–r–a–t–i–o–n–s–; –th––e–re––fo––re––, –c–la––s–s–i– –c–a–t–i–o–n–s –a–re– a––s–s–ig––n–e–d –a–n–d –a–p–p–l–ie––d a––t a––n–y –t–im– –e d––u–r–in––g –th––e –te––rm– o––f –t–h–e p––o–l–i–c–y –o–r –a–t a––u–d–i–t–:

  • C– –o–n–s–t–ru––c–t–io––n o––r e––re––c–t–i–o–n –r–i–s–k–s

  • E–m–p––lo––ye––e–l–e–a–s–i–n–g – –rm––s a––n–d p––ro––f–e–s–s–i–o–n–a–l –em–p––l–o–y–e–r –o–rg––a–n–i–za––t–io––n–s

  • L––a–b–o–r –c–o–n–t–ra––c–to––r–s

  • T–e–m– p––o–ra––r–y –la––b–o–r –se––r–v–i–ce––s

  • Oil or gas eld operations

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© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 66

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 14
BASIC MANUAL—2001 EDITION
TEXAS RULE EXCEPTIONS
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

A. P–R–E–M––IU–M– B–A–S––IS–

C–h––a–n–g–e–th––e e––x–ce––p–t–io––n–s–to– R–u––le– 2––-A– a––s–fo––l–lo–w––s–:
E–x––c–ep––t–io–n–s––: P––re–m––iu–m– –fo––r d––om–e––s–t–i–c w–o––r–ke––r –c–la––s–s–i– –ca––t–io––n–s–i–s –ca––l–cu––la––te––d o––n a– p––e–r –ca––p–i–ta– b––a–s–i–s o––r o––n a–

p––a–y–ro––l–l b––a–s–i–s–. R– e––fe––r –to– R– u––le– 3––-C––-5––-b– –fo––r –th––e p––re–m––iu–m– d––e–te––rm––in––a–t–io––n –ru––le––s–.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 67

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 15
BASIC MANUAL—2001 EDITION
TEXAS RULE EXCEPTIONS
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION B. PAYROLL

1. Includes:

Change the exception to Rule 2-B-1-p as follows:

Exception:

W– h––e–n –i–t –ca––n b––e –ve––r–i– e––d –th––a–t –th––e e–m– p––lo––ye––e w– a––s a–w– a––y –f–ro–m– h––om– e– o––ve––rn––ig––h–t o––n –th––e b––u–s–in––e–s–s o––f –th––e e–m– p––lo––ye––r–, b––u–t –th––e e–m– p––lo––ye––r d––id– n––o–t m– a––in––ta––in– –ve––r–i– a––b–le– –re––ce––ip––t–s –fo––r –in––cu––r–re––d e––xp––e–n–se––s–, a– –re––a–so––n–a–b–le– e––xp––e–n–se– a––l–lo–w–a––n–ce––,–l–im––i–te––d–to– a– m–a––x–im–u–m– o––f–th––e–IR–S– a––l–lo–w–a––b–le– p––e–r d––ie–m– a–m–o––u–n–t–,–i–s p––e–rm––i–t–te––d–. In Texas, the national $75 maximum expense allowance does not apply. Instead, the reasonable expense allowance is limited to a maximum of the IRS allowable per diem amount.

Add the following to Rule 2-B-1:
s. –r–. Allocated business expenses such as housing, automobile, clothing, tools, m– o––v–in––g–, etc.

t. –s–. Automobile mileage allowances in excess of IRS guidelines. u. –t–. Dividends paid by payroll of unvested stock.

2. Excludes:

C–h––a–n–g–e–th––e n––o–te––to– R–u––le– 2––-B––-2––-h– a––s–fo––l–lo–w––s–:

Note: W– h––e–n –i–t –ca––n b––e –ve––r–i– e––d –th––a–t –th––e e–m– p––lo––ye––e w– a––s a–w– a––y –f–ro–m– h––om– e– o––ve––rn––ig––h–t o––n –th––e b––u–s–in––e–s–s o––f –th––e e–m– p––lo––ye––r–, b––u–t –th––e e–m– p––lo––ye––r d––id– n––o–t m– a––in––ta––in– –ve––r–i– a––b–le– –re––ce––ip––t–s –fo––r –in––cu––r–re––d e––xp––e–n–se––s–, a– –re––a–so––n–a–b–le– e––xp––e–n–se– a––l–lo–w–a––n–ce––,–l–im––i–te––d–to– a– m–a––x–im–u–m– o––f–th––e–IR–S– a––l–lo–w–a––b–le– p––e–r d––ie–m– a–m–o––u–n–t–,–i–s p––e–rm––i–t–te––d–.

Add the following to Rule 2-B-2:

  1. Reimbursements for business expenses such as automobiles, meals, lodging, etc.

  2. Safety awards received by employees as a supplement to the employees’ wages in accordance with the employer’s written adopted accident prevention plan provided to the carrier at policy inception or at the time of adoption of the accident prevention plan if during the policy period.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 68

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

EXHIBIT 16
BASIC MANUAL—2001 EDITION
TEXAS RULE EXCEPTIONS
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

D. PAYROLL LIMITATIONS

Add the following to Rule 2-D-2–1-a:
The payroll limitation for executive of cers applies whether –c–la––s–s–i– e––d a––s assigned to Code 8809 or a––s

to any other classi cation. Refer to the Texas –s–ta––te– rate pages for speci c limitations.

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NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. B-1433 PAGE 69

ITEM B-1433—REVISIONS TO BASIC MANUAL RULE 1—CLASSIFICATION ASSIGNMENT AND RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION

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c.

EXHIBIT 17
BASIC MANUAL—2001 EDITION
TEXAS RULE EXCEPTIONS
RULE 2—PREMIUM BASIS AND PAYROLL ALLOCATION
E. EXECUTIVE OFFICERS, MEMBERS OF LIMITED LIABILITY COMPANIES, PARTNERS, AND SOLE PROPRIETORS
1. Executive Of cers

Executive Of cers Performing Flight Duties

Change Rule 2-E-1-c as follows:

Payroll of an executive of cer who is a pilot or member of the ying crew of an aircraft used in the –in––s–u–r–e–d–’–s employer’s business must be assigned as follows:

(1) For each day that the executive of cer did not perform ight duties, assign the executive of cer’s payroll in accordance with Rule 2-E-1-b.

(2) For each day the executive of cer performed ight duties, the payroll calculated on the basis of 300 days a year must be assigned to C–o––d–e 7––4–2–1 the appropriate aviation ying crew classi cation. However, if the executive of cer’s non ying duties on such a day are subject to a higher rated classi cation, assign the higher rated classi cation for that day.

Note: The above rules apply on the basis of the pilot’s logbook, which is required under federal regulations, or on the basis of veri able records.

(3) If C–o––d–e 7––4–2–1 an aviation ying crew classi cation applies and veri able records are not kept to indicate those days during which ying is performed by executive of cers, assign the executive of cer’s payroll to the highest rated classi cation that applies to any of their duties.

R–e––fe––r–to– E––le––c–t–io––n o––f C–o––ve––ra––g–e–s R–e––fe––re––n–ce– T–a––b–le––in––th––e U–s––e–r–'s– G–u––id–e