July 2021 – Workers’ Compensation – New Changes to X-Mods, Classification Rules
INSURANCE COMMISSIONER Ricardo Lara has approved a regulatory filing that will change the premium threshold for employers to qualify for an experience modifier (X-Mod).
The approval was part of a larger regulatory filing the Workers’ Compensation Rating Bureau made to also change expected claims costs, eliminate a few class codes and make new rules for companies that operate multiple enterprises.
The approved filing also updates expected claims cost rates for all 500-plus worker class codes that are used to calculate workers’ comp rates. Here’s a rundown of the changes:
Currently, the minimum premium an employer must pay annually to receive an X-Mod is $9,900, but that is falling to $9,500, starting Sept. 1. That means any employer that has an annual premium of $9,500 starting on that date will be “experience rated.” The X-Mod is a number used by insurance companies to either discount or increase the premiums you pay for workers’ compensation insurance. It is based on your company’s workers’ comp claim history and reflects the most recent three years.
Multiple enterprises rule
The new rules make changes to what is known as the “multiple enterprises rule,” which applies to companies that have two or more operations that perform work that is classified differently. In those cases, the distinct operations must be classified under the multiple enterprises rule.
In the new rule, separation is the key requirement. If distinct operations are physically separated, each distinct location shall be separately classified.
Separation can be separate operations:
• Located in separate buildings,
• Located on separate floors of a building, or
• Separated by walls if they are on the same floor.
However, if two or more of the distinct operations are not physically separated, they must be assigned to the highest-rated classification applicable to the operations conducted in the common workspace.
The rule also addresses personnel that may float between multiple enterprises, performing different types of work at each operation.
Under the rule, such an employee’s work may be divided into two classifications. If you plan to classify them this way, make sure to keep accurate and complete records supported by time cards or time book entries that show how much time they spent performing each distinct work task for each entity.
If the employer fails to keep those records, the entire pay of the worker will be assigned to the highest-rated classification applied to any part of the work they perform.
There are also changes being made to some construction classes.
The 8110 – Stores Welding supplies classification is being eliminated and covered operations will be reassigned to 8010 – Stores hardware, electrical or plumbing supplies. Also, the iron or steel erection classes 5057 and 5059 will be eliminated, as well as subclasses 5102(3), 5040(2) and 5040(3).
Operations in those eliminated classifications will instead be assigned into one of two consolidated classes:
• 5040 – Structural Iron or Steel operations, or
• 5102 – Iron, Steel, Brass, Bronze or Aluminum Erection – non-structural.