Workers’ Compensation Archives

JULY 8, 2015: Using Collective Bargaining Agreements to validate the hourly wage of construction employees.

Some Construction or Erection classifications are Dual Wage classifications that require verification that the employee’s regular hourly wage equals or exceeds a specified amount. This hourly wage verification is performed as part of the policy final audit. Dual Wage classifications are subject to record keeping requirements that are provided in the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995 (USRP) at Part 3, Section IV, Rule 2a(1), Records of Payroll. This rule states, in part:

For all employees, other than salaried employees, determination of the regular hourly wage must be supported by one of the following sources:

  1. Original time cards or time book entries for each employee. Original records must include the operations performed, the total hours worked each day and the times the employee started and ended each work period throughout the workday. At job locations where all of the employer’s operations cease for a uniform unpaid meal period, recording the start and stop times of the uniform break period is not required.
  2. A valid collective bargaining agreement that shows the regular hourly wage rate by job classification of worker. If using a collective bargaining agreement, the records must include an employee roster by job classification that permits the reconciliation of individual employees to the job classifications set forth in the collective bargaining agreement. For all employees, other than salaried employees, the payroll for which an hourly wage determination cannot be reconciled to time cards or time book entries or collective bargaining agreements as specified above shall not be assigned to a classification that requires the regular hourly wage to equal or exceed a specified amount.

For all employees, other than salaried employees, the payroll for which an hourly wage determination cannot be reconciled to time cards or time book entries or collective bargaining agreements as specified above shall not be assigned to a classification that requires the regular hourly wage to equal or exceed a specified amount.

The WCIRB has received questions regarding the use of a collective bargaining agreement (CBA) to verify employees’ hourly wage rates. A CBA, also known as a labor agreement, union agreement or union contract, is a legally enforceable contract between the management of an organization and its employees represented by a trade union and it details the rules and conditions of employment, including wages, working hours and conditions, overtime, holidays, vacations and benefits.

Because a CBA is a legally-enforceable contract, it is a reliable document for the purposes of verifying employees’ hourly wage rates. A CBA does not include the names of individual employees as it usually applies to many different employers who bargain together and become a signatory to the agreement. A CBA does list categories of construction workers, and the wages and benefits that must be paid to workers in each category. When using a CBA to validate an employee’s hourly wage, it is incumbent on the auditor to reconcile each employee to their applicable category.

Related Information

Classification Search

Classification Information

Online Guide to Workers’ Compensation: The Standard Classification System

USRP Time Card Requirements – What is Acceptable?


Information Source:


JUNE 4, 2015: The workers’ compensation industry had a pretty good 2014 in which its combined ratio improved for the third consecutive year, premium grew for the fourth consecutive year, and claim frequency declined about two percent.

But the results in 2014 were not enough to relax officials at the industry’s rating and statistical organization, the National Council on Compensation Insurance (NCCI).

NCCI, which is the official rating and statistical organization for more than 30 states, today released its annual State of the Line workers’ compensation market analysis in which the group describes the current state of the industry as “calm now … but turbulence ahead.”

Challenges Ahead

“The most recent results show that 2014 was a good year for the industry—and that follows solid results in 2013,” said NCCI President and CEO Steve Klingel. “It would be great if these results marked the beginnings of a new trend line, but ours is a business that runs in cycles. And despite the current calm conditions, we are anticipating turbulence ahead.”

NCCI says that among the challenges facing the workers’ compensation industry are that claim severity increased slightly more than inflation measures for indemnity and medical costs and a continuing low-interest-rate environment threatens investment results over the long term.

Also, while premium volume continues to increase, construction and manufacturing employment totals remain well below pre-recession levels, which is restraining even higher premium growth rates.

2014 Results

The workers’ compensation calendar year combined ratio for private carriers was 98 in 2014, a four-point decrease from 2013. Total market net written premium increased by approximately 6% to $44.2 billion, driven primarily by an increase in payroll.

Klingel pointed to a number of trends that NCCI finds worrisome.

“From ongoing threats to exclusive remedy, to the risk of benefit increases without appropriate rate adjustments, to the rapidly changing nature of our workforce and workplaces, our industry is being tried on all sides today,” he said. “While I am confident that we will work our way through these challenges, it is important to be realistic about current conditions and to recognize that the current positive results may not last.”

NCCI Chief Actuary Kathy Antonello took a similar approach– refraining from expressing too much joy over the improvements in 2014 because of the dangers ahead.

She welcomed that the combined ratio fell below 100 for the first time since 2006, that there was a second year of above average operating gains, and that 2014 saw a continued decline in claim frequency.

“On the other hand, indemnity and medical severity increases have begun to outpace increases in the average weekly wage and medical consumer price index, low interest rates continue to make investing a challenge, and employment in some sectors of the economy—particularly construction and manufacturing—remains well below pre-recession levels,” Antonello said.

The calendar year combined ratio for private carriers of 98 for 2014 was driven primarily by a decrease in the loss ratio. The calendar year combined ratio has improved 17 points since 2011. The accident year results also showed improvement in 2014, falling four points to a combined ratio of 95.

NCCI’s Highlights

Other market indicators and trends highlighted in NCCI’s 2015 State of the Line report include:

  • The calendar year 2014 underwriting results combined with investment gains on insurance transactions produced a workers compensation pretax operating gain of 14% for 2014.
  • The overall reserve position for private carriers further improved in 2014. NCCI estimates the year-end 2014 reserve position to be a $10 billion deficiency for private carriers—down from $11 billion in 2013.
  • Lost-time claim frequency maintained a path of decline in 2014—down 2%, on average, in NCCI states.
  • In NCCI states, the average indemnity cost per lost-time claim increased by 4% in 2014, following increases of less than 2% each year from 2011–2013.
  • Similarly, the average medical cost per lost-time claim increased by 4% in 2014—following increases of 2–3% in each of the prior three years.
  • Last year marked the fourth consecutive year of workers compensation residual market premium growth. Premiums grew by approximately 7% in 2014, while the average market share in the residual market held steady at 8%. NCCI’s latest data shows that total residual market premium declined in the first quarter of 2015 compared to the first quarter of 2014.
  • Despite the growth in premium volume, the residual market policy year combined ratio held steady at 106 in 2014. The total underwriting loss in the residual market pools serviced by NCCI grew to $74 million, up slightly from $64 million in 2013.

Source: NCCI



SEPTEMBER 23, 2014: Last Friday, the federal Occupational Safety and Health Administration issued final rules making significant changes to its injury and illness recording and reporting regulations. The current rule requires employers to report workplace fatalities and hospitalization of three or more employees to OSHA. The new requirement mandates OSHA notification for every employee work-related hospitalization, amputation or loss of an eye.

The new rule preserves the current requirement for reporting fatalities or multiple hospitalizations to OSHA within eight hours. OSHA will require reporting for the new hospitalization and other requirements within 24 hours of their occurrence. In addition to the existing toll-free telephone number, OSHA is establishing an online registry through OSHA’s website as an alternative means to provide the required notice.

Hospitalization is defined as formal admittance on an in-patient basis involving at least one overnight stay. Amputations are defined as traumatic loss of a limb or partial loss, whether or not bone loss is involved (including fingertip loss), with or without patient hospitalization. The hospitalization rules include employee admittances for work-related illnesses in addition to traumatic injuries. Injuries resulting from motor vehicle accidents on public roads are exempted from the reporting requirement.

Employers may not be immediately aware of the reasons for such hospitalization, and the reporting times run from the moment the employer learns that the admittance is related to a workplace injury or illness. Hospitalizations that occur more than 24 hours after a workplace “incident” do not need to be reported to OSHA. In other words, if an employee is hospitalized and claims it is due to long-term exposure to a workplace contaminant, this would not be a reportable incident, although it may need to be included in the OSHA 300 injury and illness log report.

In some cases, employers suspect that claimed employee injuries or illnesses are not actually work-related. When such employees are hospitalized, the employer will not have time to conduct a thorough review of the circumstances, and in most cases will need to report the claimed work-related injury or illness to OSHA within the 24-hour time period. The new rules make no provision for corrected notice to OSHA if the hospitalization is later determined not to have been work-related, but employers can make corrections to the OSHA 300 log.

OSHA expects its notification burden under the new rules to rise from 4600 to 210,000 notices per year. In the past, notification of a fatality or multiple hospitalization guaranteed a response and usually a visit from an OSHA investigator. Given the broad expansion of these reporting requirements, the agency simply does not have the resources to investigate each individual employee hospitalization. Employers will not know what degree of follow-up will result from their reports. OSHA somewhat cryptically says that it will only follow up on reports where the hospitalization appears to indicate a remediable hazard.

The final rule also includes updates to the list of industries exempt from OSHA’s illness and injury record keeping requirements. Businesses exempt from these general requirements still must comply with the death and hospitalization notification requirements. The new rules become effective January 15, 2015. OSHA will issue notice of its new web portal for reporting between now and that date.


Information courtesy of Jonathan Crotty and Charlotte Offerdahl, Parker Poe Adams & Bernstein LLP


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