Chapter 4123-17 General Rating for the State Insurance Fund

4123-17-01 Annual rate revision, method of adoption, effective date, publication.

(A) Private employers.

(1) The annual revision of premium rates as provided in division (B) of section 4123.34 of the Revised Code shall apply to all renewals, reinstatements and new coverage effective on or after July first of each year, unless otherwise specifically provided. At the same time the bureau of workers’ compensation may adopt such changes in classification of occupations or industries with respect to their degree of hazard as will best serve to determine the risks of the different classes of occupations and will enable the establishing of appropriate premium rates measured by the hazard involved.

(2) The revised premium rates and changes in classification of occupations or industries with respect to their degree of hazard, as provided in paragraph (A)(1) of this rule, shall be adopted by rules recommended by the administrator and with the advice and consent of the workers’ compensation oversight commission as provided under division (F) of section 4121.12 of the Revised Code.

(3) The rules, with the revised premium rates and changes in classification of occupations or industries (if any) attached thereto, shall be filed with the secretary of state and the legislative service commission as provided under section 111.15 of the Revised Code. The revised rates and changes in classifications (if any) shall become effective on the date indicated on the filed rule.

(B) Public employers, taxing districts.

(1) The annual revision of premium rates for the taxing districts, as provided in section 4123.39 of the Revised Code, shall apply to all renewals, reinstatements and new coverage effective on or after January first of each year, unless otherwise specifically provided.

(2) The revised premium rates as provided in paragraph (B)(1) of this rule, shall be adopted by rules recommended by the administrator and with the advice and consent of the workers’ compensation oversight commission as provided under division (J) (F) of section 4121.12 of the Revised Code.

(3) The rule with the revised premium rates shall be filed with the secretary of state and the legislative service commission as provided under section 111.15 of the Revised Code. The revised rates shall become effective on the date indicated on the filed rule.

(1) The annual revision of premium rates, including all renewals, reinstatements and new coverage for the state of Ohio, its agencies and instrumentalities, as provided in section 4123.40 of the Revised Code, for all state agencies shall be effective July first of each year.

(2) The revised premium rates as provided in paragraph (C)(1) of this rule shall be adopted by rules recommended by the administrator and with the advice and consent of the workers’ compensation oversight commission as provided under division (F) of section 4121.12 of the Revised Code.

HISTORY: Replaces rule 4121-7-01; Eff 8-15-77; 7-2-78; 11-26-79; 8-5-80; 9-1-93; 11-22-04

Rule promulgated under: RC 119.03

Rule authorized by: RC 4121.12, 4121.13, 4121.30

Rule amplifies: RC 4123.29, 4123.32, 4123.34, 4123.39, 4123.40, 4123.411

R.C. 119.032 review dates: 09/01/2004 and 03/01/2008

4123-17-02 Basic or manual rate.

(A) The “basic or manual rate” is hereby expressed as the unit of premium per one hundred dollars of payroll for accident and disease coverage.

(B) Succeeding employers — experience.

(1) Where one legal entity, not having coverage in the most recent experience period, wholly succeeds another legal entity in the operation of a business, his or its rate shall be based on the predecessor’s experience within the most recent experience period.

(2) Where a legal entity having an established coverage or having had experience in the most recent experience period wholly succeeds one or more legal entities having established coverage or having had experience in the most recent experience period and at least one of the entities involved has a merit rating experience, the experience of all the involved entities shall be combined to establish the rate of the successor.

(3) Where a legal entity succeeds in the operation of a portion of a business of one or more legal entities having an established coverage or having had experience in the most recent experience period, the successor’s rate shall be based on the predecessor’s experience within the most recent experience period, pertaining to the portion of the business acquired by the successor. Pursuant to this rule, the bureau shall provide to the parties to the transfer of experience the necessary forms and instructions to complete the transfer of the appropriate payrolls and claims. Each party to the transfer of experience shall sign the completed forms. The bureau shall review the completed forms and if any questions arise, the bureau may conduct a premium audit on each party’s risk account.

(4) When any combination or transfer of experience is indicated under any of the provisions of this rule, the effective date of such combination or transfer shall be the beginning date of the next following payroll reporting period. In cases where an entity not having coverage wholly succeeds another entity or in cases where the date of succession is determined to be January 1 or July 1, the experience of the predecessor shall be transferred to the successor-employer effective as of the actual date of succession.

(5) For an out of state employer purchasing an existing Ohio operation, the bureau may use the out of state experience of the employer as a factor in determining the employer’s experience.

(1) Whenever one employer succeeds another employer in the operation of a business in whole or in part, the successor shall notify the bureau of the succession. Where one employer wholly succeeds another in the operation of a business, the bureau shall transfer the predecessor’s rights and obligations under the workers’ compensation law. The successor shall be credited with any credits of the predecessor, including the advance premium security deposit of the predecessor. This paragraph shall apply where an employer wholly succeeds another employer in the operation of a business on or after September 1, 2006.

(2) Transfer of risk coverage may be retroactive to the date of succession.

(3) The successor must preserve the predecessor’s payroll records for at least the five years preceding the date of transfer succession.

(4) A legal entity may be assigned only one risk. Where a legal entity succeeds one or more risks, he or it shall be assigned a single risk designation.

Effective: 07/27/2006

R.C. 119.032 review dates: 03/01/2008

Promulgated Under: 119.03

Statutory Authority: 4121.12, 4121.121, 4121.13, 4121.30

Rule Amplifies: 4123.32, 4123.34

Prior Effective Dates: 7/1/62; 1/10/78; 12/11/78; 11/26/79; 9/1/93; 1/27/97; 8/8/03; 1/1/04

4123-17-03 Employer's classification rates.

(A) An employer’s premium rates shall be the manual basic rates as provided under rules 4123-17-02, 4123-17-06, and 4123-17-34 of the Administrative Code for each of its classifications except as modified by its experience rating, and shall apply for the first two six-month periods beginning on or after the first of July for private employers and shall apply for the calendar year beginning on or after the first of January for public employer taxing districts.

(1) In calculating the manual base rate under this rule, the bureau shall exclude the experience of an employer that is no longer active if the inclusion of the inactive employer’s experience would have a significant negative impact upon the remaining active employers in a particular manual classification.

(2) The calculation of the base rate and the experience rate shall be applied to all employers reporting payroll in the manual classification, whether or not the premiums of the individual employers are reduced.

(3) Once the bureau has determined that the loss data of a specific inactive employer shall be removed from the manual classification experience, the bureau shall exclude the data of that employer from all future manual classification rate calculations. If that inactive employer reactivates its account with the Ohio state insurance fund, the bureau shall include the loss data in rate calculations for the manual classification.

(4) As used in this rule, an employer that is “no longer active” or is “inactive” is defined as an employer that satisfies all of the following criteria:

(a) The employer is assigned the policy status “bankrupt cancel,” “cancel effective date,” “final cancel,” “canceled uncollectible,” “no coverage due to claim,” or “no coverage;”

(b) The employer is not reporting payroll;

(c) The employer is not paying or assessments to the Ohio state insurance fund as of the rate cut off date under either its own identity, the identity of any successor entity, or as a self-insured entity; and

(d) The employer does not employ employees for which Ohio workers’ compensation jurisdiction would apply.

(5) As used in this rule, a “significant negative impact” is defined as occurring when the inactive employers in the manual reported forty per cent or more of the payroll in the manual classification in any calendar year in the experience period and when the loss rate and loss/premium ratio of the inactive employers taken as a whole are significantly higher than those of the active employers taken as a whole as measured using the data from the prior policy year’s most current four years data. For private employer rates effective July 1, 1997, the bureau shall use the experience period data of the current policy year.

(B) An experience-rated employer’s manual classification rate modification (credit or penalty) shall be determined by multiplying its experience modification percentage (EM%) times the basic manual rate for each assigned manual classification. The amount of the modification shall then be subtracted from or added to the respective basic rate to obtain the employer’s premium rate for each classification.

(C) The experience modification percentage (EM%) shall be determined on the basis of the employer’s experience and applied to the basic rate. The experience modification percentage of the employer’s rate is determined in accordance with the following formula:

Subtract the TLL from the TML (TML – TLL), then divide by the TLL; multiply the resulting number by the C%; then add 100 to the resulting number, which will equal the EM%.

TML = Actual losses of the employer for the experience period as reduced in accordance with the maximum value. For individually rated employers, the EM% calculation will use the lower of the total modified losses from either the tabular reserve system or the MIRA reserve system. The TML that will be used in the calculation of the group EM% will be the lower of the TMLs from either the tabular reserve system or the MIRA reserve system, as determined at the individual employer level.

TLL = Total limited losses = TEL x LLR

TEL = Total expected losses as determined by applying the national council of compensation insurance (NCCI) expected loss rate to the NCCI classification payroll of each NCCI classification in the employer’s experience period, as provided in appendix A of rule 4123-17-04 of the Administrative Code. The total expected losses are then used to determine the maximum value of a loss, credibility, and CX constant.

LLR = Limited loss ratio = 1-CX/C%. This ratio is calculated for each credibility group within each industry group and is published as Table 1, Part C, in rule 4123-17-05 of the Administrative Code for private employers and rule 4123-17-33 of the Administrative Code for public employer taxing districts.

C% = Credibility given to an employer’s own experience. Credibility is assigned by applying the employer’s total expected losses to Table 1, Part A, in rule 4123-17-05 of the Administrative Code for private employers and rule 4123-17-33 of the Administrative Code for public employer taxing districts.

CX = Constant for each employer size group (group maximum value pool).

EM% = Credit or penalty applied to the basic rate.

(D) An employer’s expected losses shall be the sum of the expected losses for each of its classifications. The expected losses for a classification shall be obtained by applying the expected loss rate of the table of rates to the employer’s four-year payroll of the classification.

(E) The “experience period” shall be the oldest four of the latest five calendar years immediately preceding the beginning of the payroll reporting period to which the revised rates are applicable.

(F) Experience modification shall be subject to the following conditions and limitations:

(1) Actual losses include all incurred costs and shall be limited to the amounts stated in the credibility table according to the total expected losses of an employer;

(2) An employer shall not be eligible for experience modification of basic rates unless its expected losses are at least the minimum amount in the credibility table, as periodically established for the applicable rating period by rule adopted by the administrator with the advise and consent of the workers’ compensation oversight commission and filed with the secretary of state and the legislative services commission;

(3) The maximum credit modification will be ninety-five per cent. Commencing with rating years beginning January 1, 1995, and later, shall be no limitation on the penalty modification.

(G) Commencing with the rating year beginning July 1, 1987, and all subsequent rating years, all manual classifications of the state insurance fund are subject to experience rating (i.e., merit rating).

HISTORY: Eff 8-19-77; 7-2-78; 7-1-79; 7-1-80; 7-1-82; 7-1-83; 7-1-87; 7-1-88; 1-1-92; 7-1-97; 9-8-97; 7-1-02

Rule promulgated under: RC 111.15

Rule authorized by: RC 4121.12, 4121.121, 4121.13

Rule amplifies: RC 4123.29, 4123.34

4123-17-03.1 Experience modification for out of state employer.

(A) Where an employer that has not had prior operations in Ohio and has not had prior workers’ compensation insurance coverage in Ohio moves operations from another state into Ohio or begins operations in Ohio that are the same or similar to operations outside Ohio and is, as a result, amenable to Ohio workers’ compensation laws, the bureau may assign to that employer for purposes of individual experience rating in Ohio the individual experience modifier as was applied to that employer’s operations in the state from which the operations are being moved or with similar or same operations, not withstanding any alternative rating plans in place for that policy year in the other state. This rule does not apply to the purchase of existing Ohio operations as covered by rule 4123-17-02 of the Administrative Code. The bureau may apply the experience modifier from the other state that is effective on the date one day prior to that day on which the Ohio workers’ compensation coverage became effective. The bureau shall apply such experience modifier to the partial year ending June 30 after the start of coverage in Ohio and to the first full policy year subsequent to the start of coverage in Ohio for the determination of premium obligations to the Ohio State Insurance Fund.

(B) For the operations being moved to Ohio or started in Ohio, the employer shall provide to the bureau its most current twelve-month payroll, by manual classification. If in the opinion of the bureau that payroll is not of sufficient size to warrant experience rating as measured by the Ohio rules for experience rating, the employer may not apply its experience modifier from another state to Ohio premium obligations.

(C) The employer meeting such criteria as is established in this rule shall demonstrate that it has been an amenable employer in the other state by submitting its coverage history, its experience modifier calculation, and a list of any outstanding liabilities with the other state insurance provider. The employer shall submit a copy of its most current workers’ compensation insurance policy under which the operations outside of Ohio have been covered. Where the employer has failed to provide sufficient evidence of an actual move of operations to Ohio from another state or the start of similar or same operations in Ohio, the bureau will not use an experience modifier from another state for Ohio premium rate calculations. In the event that outstanding workers’ compensation insurance liabilities exist in another state that are unpaid more than sixty days, or in the event the information required to be submitted is not timely provided, the bureau may assign the employer a penalty rate of up to one hundred and fifty per cent of the base rate.

HISTORY: Eff 01/01/04

Rule promulgated under: RC 119.03

Rule authorized by: RC 4121.12, 4121.13, 4121.30

Rule amplifies: RC 4123.32, 4123.34

RC 119.032 review dates: 03/01/2008

4123-17-04 Classification of occupations or industries.

The administrator of workers’ compensation, with the advice and consent of the workers’ compensation oversight commission, has authority to approve the classification of occupations or industries pursuant to sections 4121.12, 4121.121, and 4123.29 of the Revised Code. The administrator hereby establishes the following classifications of occupations or industries to be effective July 1, 2007, as indicated in the attached appendix A, the classification of occupations or industries that is based upon the national council on compensation insurance as required by division (A)(1) of section 4123.29 of the Revised Code.

Appendix A NATIONAL COUNCIL ON COMPENSATION INSURANCE (NCCI) CLASSIFICATION OF INDUSTRIES

See Appendix at http://www.registerofohio.state.oh.us/pdfs/4123/0/17/4123-17-04_FF_A_APP2_20070606_1030.pdf

Effective: 07/01/2007

Promulgated Under: 111.15

Statutory Authority: 4121.11, 4121.12, 4121.121, 4121.13, 4121.30

Rule Amplifies: 4123.29

Prior Effective Dates: 7/1/90, 7/1/91, 7/1/92, 7/1/93, 7/1/94, 7/1/95, 7/1/96, 7/1/97, 7/1/98, 7/1/99, 7/1/00, 7/1/01, 7/1/06

4123-17-05 Private employer credibility table used for experience rating.

Appendix A Table 1: Part A: Credibility and Maximum Value of a Loss

See Appendix A at http://www.registerofohio.state.oh.us/pdfs/4123/0/17/4123-17-05_FF_A_APP4_20070619_0853.pdf

Appendix B Table 1: Part B: NCCI Manual Classifications

See Appendix B at http://www.registerofohio.state.oh.us/pdfs/4123/0/17/4123-17-05_FF_A_APP5_20070619_0853.pdf

Appendix C Table 1: Part C: INDUSTRY GROUP (LLR)

See Appendix C at http://www.registerofohio.state.oh.us/pdfs/4123/0/17/4123-17-05_FF_A_APP6_20070619_0853.pdf

Effective: 07/01/2007

Promulgated Under: 111.15

Statutory Authority: 4121.12, 4121.121

Rule Amplifies: 4123.29, 4123.34

Prior Effective Dates: 7/1/90, 7/1/91, 7/1/92, 7/1/93, 7/1/94, 7/1/95, 7/1/96, 7/1/97, 7/1/98, 7/1/99, 7/1/00, 7/1/01, 7/1/02, 7/1/03, 7/1/04, 7/1/05, 7/1/06

4123-17-05.1 Private employer credibility table.

The administrator of workers’ compensation, with the advice and consent of the bureau of workers’ compensation board of directors, has authority to approve contributions made to the state insurance fund by employers pursuant to sections 4121.121, 4123.29, and 4123.34 of the Revised Code. The administrator hereby sets the credibility table part A, “credibility and maximum value of a loss,” to be effective July 1, 2008, applicable to the payroll reporting period July 1, 2008, through June 30, 2009, for private employers as indicated in the attached appendix A.

APPENDIX A Credibility and Maximum Value of a Loss

Credibility Group Expected Losses Credibility Percent Group Maximum Value

1 8,000 4 12,500

2 15,000 9 12,500

3 27,000 13 25,000

4 45,000 17 37,500

5 62,500 21 55,000

6 90,000 26 75,000

7 122,500 30 87,500

8 160,000 34 100,000

9 202,500 38 112,500

10 250,000 43 125,000

11 302,500 47 137,500

12 360,000 51 150,000

13 422,500 55 162,500

14 490,000 60 175,000

15 562,500 64 187,500

16 640,000 68 200,000

17 722,500 72 212,500

18 810,000 77 225,000

19 902,500 81 237,500

20 1,000,000 85 250,000

Replaces: Part of Rule 4123-17-05

Effective: 07/01/2008

Promulgated Under: 111.15

Statutory Authority: 4121.12, 4121.121

Rule Amplifies: 4123.29, 4123.34

Prior Effective Dates: 7/1/90, 7/1/91, 7/1/92, 7/1/93, 7/1/94, 7/1/95, 7/1/96, 7/1/97, 7/1/98, 7/1/99, 7/1/00, 7/1/01, 7/1/02, 7/1/03, 7/1/04, 7/1/05, 7/1/06, 7/1/07

4123-17-06 Private employer contributions to the state insurance fund.

Appendix A

BUREAU OF WORKERS’ COMPENSATION

NCCI BASE RATES AND EXPECTED LOSS RATES

EFFECTIVE JULY 1, 2007

See Appendix at http://www.registerofohio.state.oh.us/pdfs/4123/0/17/4123-17-06_FF_A_APP2_20070619_0853.pdf

Effective: 07/01/2007

Promulgated Under: 111.15

Statutory Authority: 4121.12, 4121.121

Rule Amplifies: 4123.29, 4123.34

Prior Effective Dates: 7/1/90, 7/1/91, 7/1/91 (Emer.), 7/1/92, 7/1/93, 7/1/94, 7/1/95, 7/1/96, 7/1/97, 7/1/98, 7/1/99, 7/1/00, 7/1/01, 7/1/02, 7/1/03, 7/1/04, 7/1/05, 7/1/06

4123-17-07 Officers of corporations, partnerships and sole proprietorships, an individual incorporated as a corporation with no employees, family farm corporations, and ordained ministers.

(A) Officers of corporations.

(1) The actual remuneration of an executive officer of a corporation, such as president, vice president, secretary, treasurer, and any other executive officer enumerated in and empowered by the corporate charter or any regularly adopted bylaws of the corporation and elected or appointed and empowered by the directors to perform duties for the corporation, shall be included in the payroll report of the corporation, subject to a weekly minimum and maximum as shall be periodically established by the administrator of the bureau of workers’ compensation as provided in rule 4123-17-30 of the Administrative Code. Such remuneration shall be assigned to the classification applicable to the duties performed.

(2) Paragraph (A)(1) of this rule shall not apply to family farm corporations as defined in division (E) of section 4123.01 of the Revised Code. The remuneration of the officers of such corporation shall not be reported as part of the payroll of such employer, unless such employer elects to include as an “employee,” within Chapter 4123. of the Revised Code, any of the officers of the family farm corporation, in which case the procedure outlined in paragraph (B) of this rule shall be applicable.

(B) Partnerships, sole proprietorships, limited partnerships, an individual incorporated as a corporation with no employees, and family farm corporations.

(1) If the employer is a partnership, sole proprietorship, limited partnership, an individual incorporated as a corporation with no employees, or family farm corporation, the remuneration of the sole proprietor, member of the partnership, member of a limited partnership, individual incorporated as a corporation with no employees, or officer of the family farm corporation shall not be reported as part of the payroll of such employer, unless the sole proprietor, the partnership, the limited partnership, the individual incorporated as a corporation with no employees, or the family farm corporation elects to include any such person as an employee as provided in division (A)(2) of section 4123.01 of the Revised Code. In the event of such election, the employer shall serve written notice to the bureau of workers’ compensation on the appropriate bureau form, which notice shall name the person or persons to be covered and whose remuneration shall be included in payroll reports for premium purposes. Upon the filing of such election, sole proprietors, members of a partnership, members of a limited partnership, the individual incorporated as a corporation with no employees, and officers of a family farm corporation who sustain injuries or contract occupational diseases in the course of and arising out of employment shall be entitled to receive compensation and benefits as provided in Chapter 4123. of the Revised Code; provided, however, that the coverage for such persons shall not be effective until such notice has been filed with the bureau of workers’ compensation.

(2) Upon the filing of such election as provided in paragraph (B)(1) of this rule, the actual remuneration of a sole proprietor, member of a partnership, member of a limited partnership, an individual incorporated as a corporation with no employees, or officer of a family corporation shall be reported and included in the payroll report of the employer subject to a weekly minimum and maximum as shall be periodically established by the administrator of the bureau of workers’ compensation as provided in rule 4123-17-30 of the Administrative Code. Such remuneration shall be assigned to the classification applicable to the duties performed.

(3) Upon receipt of the form requesting coverage for the sole proprietor, member of a partnership, members of a limited partnership, an individual incorporated as a corporation with no employees, or officer of a family farm corporation, the bureau shall refer the form to the risk processing section for processing. Coverage shall remain in effect, and the employer shall be responsible for the payment of premium thereon, until the bureau receives written notice from the sole proprietor, the partnership, the limited partnership, the individual incorporated as a corporation with no employees, or the family farm corporation requesting termination of coverage, or until terminated by the bureau pursuant to paragraph (B)(4) of this rule.

(4) In the case of a sole proprietorship, partnership, limited partnership, an individual incorporated as a corporation with no employees, or family farm corporation, failure to pay premiums timely shall terminate coverage. In the case of a sole proprietorship, partnership, limited partnership, an individual incorporated as a corporation with no employees, or family farm corporation which reports payroll for its employees only, the failure to report payroll and to pay premiums thereon for any person for whom coverage is elective shall terminate coverage for any such person only. In the event of termination of coverage for non-payment of premium, a sole proprietor, a partnership, a limited partnership, an individual incorporated as a corporation with no employees, or a family farm corporation may reinstate elective coverage only upon the filing of a subsequent application form. Reinstatement of coverage shall be effective only upon receipt of the executed form and payment of premium for such elective employees, and no retroactive coverage may be granted except as provided in rule 4123-14-03 of the Administrative Code.

(1) Division (A)(2)(a) of section 4123.01 of the Revised Code excludes from coverage duly ordained, commissioned, or licensed ministers or assistant or associate ministers of a church in the exercise of their ministry. The remuneration for such persons shall not be reported as part of the payroll of a church employer, unless the church elects to include as an employee such persons as provided in division (A)(2) of section 4123.01 of the Revised Code. In the event of such election, the employer shall serve written notice to the bureau of workers’ compensation. Notice shall name the person or persons to be covered and whose remuneration shall be included in payroll reports for premium purposes. After proper election and notice, such persons shall be considered employees and entitled to compensation and benefits as provided in Chapter 4123. of the Revised Code; provided however, that the coverage for such persons shall not be effective until such notice has been filed with the bureau.

(2) Upon receipt of written notice or the appropriate form requesting coverage for the minister or ministers, the bureau shall refer such written notice or form to the risk processing section for processing. Coverage shall remain in effect, and the employer shall be responsible for the payment of premium thereon, until the bureau receives written notice from the church employer requesting termination of coverage, or until terminated by the bureau pursuant to paragraph (C)(3) of this rule.

(3) In the case of a church employer, failure to pay premiums timely shall terminate coverage for such employer. In the case of a church employer which reports payroll for its employees only, the failure to report payroll and to pay premiums thereon for any minister for whom coverage is elective shall terminate coverage for any such minister only. In the event of termination of coverage for nonpayment of premium, a church employer may reinstate elective coverage only upon the filing of a subsequent application form. Reinstatement of coverage shall be effective only upon the receipt of the executed form and payment of premium for such elective employees, and no retroactive coverage may be granted except as provided in rule 4123-14-03 of the Administrative Code.

Effective: 07/27/2006

R.C. 119.032 review dates: 03/01/2008

Promulgated Under: 119.03

Statutory Authority: 4121.12, 4121.121, 4121.13, 4121.30, 4123.05

Rule Amplifies: 4123.01, 4123.24, 4123.26, 4123.34

Prior Effective Dates: 7/1/62; 12/1/78; 10/1/79; 8/22/86 (Emer.); 11/10/86; 9/1/93; 1/1/05

4123-17-08 Classifications according to National council on compensation insurance.

In accordance with division (A)(1) of section 4123.29 of the Revised Code, the purpose of this rule is for the bureau of workers’ compensation to conform the classifications of industries according to the categories the national council on compensation insurance (NCCI) establishes that are applicable to employers in Ohio. This rule is based upon “Rule 1, Classification Assignment,” effective January 1, 2002, of the classification rules of the NCCI and “Rule 2G, Interchange of Labor.” The rule is used with the permission of the NCCI and is modified to conform to the requirements of the Ohio administrative code and the bureau of workers’ compensation. Where the NCCI scopes of basic manual classifications contains additional rules and information relating to the reporting of payroll or classification of industries under the manual classifications, such scopes and rules shall apply under the rules of the bureau of workers’ compensation, unless otherwise specifically excepted.

(A) Classification system.

(1) The purpose of the classification system is to group employers with similar operations into classifications so that:

(a) The assigned classification reflects the exposures common to those employers.

(b) The rate charged reflects the exposure to loss common to those employers.

(2) Subject to certain exceptions, it is the business of the employer within a state that is classified, not separate employments, occupations or operations within the business.

(B) Explanation of classifications.

Classifications are divided into two types – basic classifications and standard exception classifications.

(1) Basic classifications.

Basic classifications describe the business of an employer. This term is applied to all classifications listed in this manual, except for the standard exception classifications.

Examples of classifications that describe the business of the employer include:

(a) Business: manufacture of a product = classification: furniture manufacturing.

(b) Business: a process = classification: engraving.

(d) Business: a mercantile business = classification: hardware store.

(e) Business: a service = classification: beauty salon.

(2) Standard exception classifications.

Standard exception classifications describe occupations that are common to many businesses. These common occupations are not included in a basic classification unless specified in the classification working. The standard exception classifications are described below.

(a) Clerical office or drafting employees NOC (code 8810); clerical office or drafting telecommuter employees (code 8871).

The above classifications are assigned when all the following conditions are met: the basic classification(s) wording applicable to the business does not include clerical office, drafting or telecommuting employees; other rules do not prohibit the assignment of code 8810 or code 8871; and the employee meets the duties, site and other requirements listed below:

(i) Duties.

Duties must be limited to one or more of the following work activities:

(a) Creation or maintenance of employer records, correspondence, computer programs, files.

(b) Drafting.

(d) Data entry or word processing.

(e) Copy or fax machine operations, unless the insured is in the business of making copies or faxing for the public.

(f) General office work similar in nature to the above.

(ii) Site.

(a) Code 8810 – the duties above must take place in a work station that is separated from the operative hazards of:

(i) Factories.

(ii) Stores;

(iii) Shops;

(iv) Construction sites;

(v) Warehouses;

(vi) Yards;

(vii) Any other work areas such as:

(A) Work or service areas.

(B) Areas where inventory is located.

(D) Areas to which the purchaser customarily brings the product from another area for payment.

(b) Work stations or service areas as described in paragraph (B)(2)(a)(ii)(a) of this rule above must be physically separated by:

(i) Floors.

(ii) Walls.

(iii) Partitions.

(iv) Counters.

(v) Other physical barriers that protect the clerical employee from the operating hazards of a business.

(c) Code 8871 – the duties above must take place in a clerical work area located within the home of the clerical employee. It must be separate and distinct from the location of the employer.

(iii) Other requirements.

(a) Employees who otherwise meet the requirements for code 8810 or code 8871 will not be disqualified from assignment to this classification if they perform certain incidental duties directly related to that employee’s duties in the office. These duties include:

(i) Depositing of funds in a bank.

(ii) Pickup or delivery of mail.

(iii) Purchase of office supplies.

(iv) Entering an area exposed to the operative hazards of the business for clerical purposes, such as delivering paychecks.

(b) Employees who otherwise meet the requirements for code 8810 or code 8871 will be disqualified from assignment to this classification if their duties involve:

(i) Outside sales or outside representatives.

(ii) Direct supervision of nonclerical employees not performed in an eligible site according to paragraph (B)(2)(a)(ii)(a) above.

(iii) Physical labor.

(iv) Any work exposed to the operative hazards of the business, such as a stock or tally clerk, that is necessary, incidental, or related to any operations of the business other than a clerical office.

(b) Drivers, chauffeurs and their helpers NOC – commercial (code 7380).

This classification is assigned to employees who perform work on or in connection with a vehicle. This code includes garage employees and employees using bicycles as part of their work duties. Duties include, but are not limited to, delivering goods owned by the employer.

Code 7380 does not apply when the basic classification wording includes drivers.

This classification is assigned to employees who perform these duties away from the employer’s premises.

This code excludes employees who:

(i) Deliver merchandise.

(ii) Use vehicles to deliver or pick up goods, even if they collect or sell. These employees must be assigned to the classification applicable to the business for drivers.

(iii) Use public transportation or walk to deliver goods, even if they collect or sell. These employees must be assigned to the governing classification applicable to the business.

Code 8742 does not apply when the basic classification wording includes outside salespersons, collectors or messengers.

(d) Automotive salespersons (code 8748).

This classification is assigned to employees who perform these duties on or away from the employer’s premises. These employees are subject to the same rules and treatment as salespersons, collectors, or messengers – outside.

(3) General inclusions.

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

(a) Restaurants or cafeterias operated by the insured for employee use. Exception: if these operations are conducted in connection with construction, erection, lumbering or mining operations, they must be separately classified.

(b) Manufacture of containers by the insured, such as bags, barrels, bottles, boxes, cans, cartons or packing cases for sole use in the operations insured by the policy.

(d) Maintenance or repair of the insured’s buildings or equipment by the insured’s employees.

(e) Printing or lithographing by the insured on its own products.

Some employees may perform general inclusion duties for more than one basic classification. In such cases, refer to paragraph (F) of this rule for classification treatment.

Exceptions:

A general inclusion operation must be separately classified if:

(i) The operation is conducted as a separate and distinct business of the insured (refer to paragraph (D)(3) of this rule).

(ii) The operation is specifically excluded in the wording of the basic classification.

(iii) The principal business is described by a standard exception classification.

General inclusions exception:

A bank, classified to the standard exception code 8810 – clerical office employees NOC, operates a restaurant for its employees’ use. A restaurant operated for the insured’s employees is a general inclusion and usually not separately classified. However, because this business is classified to a standard exception classification, the restaurant operation must be separately classified to the appropriate restaurant classification.

(4) General exclusions.

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

(a) Aircraft operations – all operations of the flying and ground crews.

(b) New construction or alterations.

(d) Sawmill operations.

(e) Employer-operated day care service.

A bank, classified to the standard exception code 8810 – clerical office employees NOC, provides a child care program for its employees. An employer-operated day care service is considered a general exclusion. This means that, unless a classification applicable to a business includes employer-operated day care services, this service is separately classified. Therefore, the child care program of the bank must be separately classified to the appropriate child care center classification(s).

(5) Governing classification.

The governing classification at a specific job or location is the classification, other than a standard exception classification, that produces the greatest amount of payroll.

If a basic classification is not applicable, the governing classification is the standard exception classification that produces the greatest amount of payroll.

The governing classification is used to determine the classification treatment of:

(a) Miscellaneous employees.

(b) Local managers.

(c) Executive officers who regularly engage in duties that are ordinarily performed by a superintendent, foreperson or worker.

Example of a governing classification: a business has the following payroll amounts assigned to the following classifications: $220,000 for code 2003 (bakery); $120,000 for code 8017 (store; retail); and $240,000 for code 8810 (clerical).

The governing code for this business is code 2003 because it is the classification code, other than the standard exception code (code 8810), with the greatest amount of payroll.

(6) Principal business.

Principal business is described by the classification, other than a standard exception or general exclusion, with the greatest amount of payroll.

If the business is best described by a standard exception operation, and there is no basic classification other than the general inclusion or exclusion operations, then the standard exception operation that produces the greatest amount of payroll for the business is considered the principal business.

The following list provides an explanation of classification wording usage.

(1) Classification captions and notes.

The “caption” is the heading that precedes the classification itself and is part of the classification wording.

The “note” is the phrase that follows the classification and is part of the classification wording.

The classification wording, including captions and notes, controls, restricts or explains the classification usage.

Example of a classification entry:

Store: fruit or vegetable – retail. No handling of fresh meats; “store” is the caption in the example and “no handling of fresh meats” is the note.

(2) Words and phrases.

(a) All employees, all other employees, all operations, or all operations to completion.

If a classification includes any of these phrases, no other classification can be assigned unless noted in the classification wording. This applies even if some operations or employees are at a separate location.

Examples of classifications that include “all employees,” “all other employees,” all operations,” or “all operations to completion:”

(i) Code 9186 (carnival, circus or amusement device operator – traveling – all employees & drivers); all employees must be assigned to this classification.

(ii) Code 7382 (bus co.: all other employees & drivers); all employees, other than garage employees, must be assigned to code 7382, not 8385;

(iii) Code 5402 (greenhouse erection-all operations); all work for the erection of a greenhouse must be assigned to this classification.

(iv) Code 6005 (jetty or breakwater construction-all operations to completion & drivers); all work for the construction of a jetty from the beginning to the end of the project must be assigned to this classification.

Exceptions:

The following operations within the business must be classified separately even if the classification wording includes “all employees,” “all other employees,” “all operations,” or “all operations to completion:”

(a) Construction or erection permanent yard (code 8227).

(b) Contractor – executive supervisor or construction superintendent (code 5606).

(c) Classifications describing an operation that is a standard exception unless the basic classification includes the standard exception operation.

(d) Classifications describing an operation that is a general exclusion.

(e) Any separate and distinct business (refer to paragraph (D)(3)(c) of this rule).

(b) Clerical.

Clerical means clerical office employees and drafting employees as defined in paragraph (B)(2)(a) of this rule.

Clerical includes clerical telecommuters as defined in paragraph (B)(2)(a) of this rule.

Drivers means drivers, chauffeurs, and their helpers as defined in paragraph (B)(2)(b) of this rule.

(d) “Includes” or “&”

If the classification wording uses the terms “includes” or “&,” the operation or employees cited after those terms must not be assigned to a separate classification. This applies even though the operation or employees may be described by another classification or are at a separate location.

Examples of classification that include the terms “includes” or “&” :

(i) Code 0005 (farm: nursery employees & drivers); all drivers must be assigned to this classification.

(ii) Code 4829 (chemical mfg. NOC – all operations & drivers – includes blending or mixing); all drivers and all blending and mixing operations must be assigned to this classification.

(iii) Code 8832 (physician & clerical); all clerical employees must be included in this classification.

Note: if an insured’s operations are assigned to more than one basic classification, an employee’s payroll may be allocated among codes appropriate for each operation. This procedure is provided under paragraph (F) of this rule, interchange of labor.

(e) Local manager.

Local manager is an employee, regardless of title, who is in direct charge of the operative procedures in the yard of a business. This employee is subject to the hazards of the business. Therefore, the payroll of the local manager must be assigned to the governing classification unless another basic classification assigned to the business specifically includes this employee.

(f) “No” or “Not”.

A classification that includes a restrictive phrase beginning with “no” or “not” must not apply to any risk that conducts any operation described in the restrictive phrase.

Examples of classifications that include the terms “no” or “not” :

(i) Code 2143 (fruit juice mfg.-no bottling of carbonated liquids); this code cannot be assigned to a business that manufactures fruit juice if it also bottles carbonated liquids.

(ii) Code 4611 (drug, medicine or pharmaceutical preparation-no mfg. of ingredients); this code cannot be assigned to a business preparing drugs, medicines, or pharmaceuticals if the business also manufactures the ingredients.

(iii) Code 8106 (steel merchant-not applicable to junk dealers); this code cannot be assigned to a steel merchant if that business also deals in junk.

Exception: for mercantile, mining or construction operations, this rule applies to each job or location.

(g) “NOC”.

“NOC” means “not otherwise classified.” If the classification wording uses the term “NOC”, that classification applies only if no other classification more specifically describes the insured’s business.

Examples of classification that include the term “NOC” :

(i) Code 2688 (leather goods mfg. NOC).

(ii) Code 3022 (pipe or tube mfg. NOC & drivers).

(iii) Code 8017 (store: retail NOC).

None of the above codes will be assigned to a business if there is another code that more specifically and accurately applies to that business.

(h) “Or” or “And”.

The terms “or” or “and” mean and/or.

Examples of classifications that include the term “or” or “and” :

(i) Code 2586 (cleaning or dyeing); a business that does cleaning and/or dyeing is classified to this code.

(ii) Code 4720 (soap or synthetic detergent mfg.); a business that manufactures soap and/or synthetic detergents is classified to this code.

(iii) Code 7612 (telephone or cable TV line installation-contractors, overhead & drivers); a business that installs overhead telephone and/or cable TV lines is classified to this code.

(i) Salespersons.

Salespersons means salespersons, collectors, and messengers as defined in paragraph (B)(2)(c) of this rule.

(j) Stories in height.

Certain classification wording refers to “stories in height.” A story is defined as fifteen feet in height. It is measured from the lowest point above ground level to the highest point above ground level. Some of these classifications are:

(i) Code 5037 (painting: metal structures – over two stories).

(ii) Code 5059 (iron or steel-erection-frame structures not over two stories).

(iii) Code 5651 (carpentry-dwellings-three stories or less).

(k) To be separately rated.

Certain classification wording contains the phrase “to be separately rated.” Operations or employees referenced in those classifications must be separately classified.

Examples of classifications that include the term “to be separately rated”;

(i) Code 2111 (cannery NOC can mfg. to be separately rated as code 3220); in a business that cans foods, the manufacturing of the cans must separately classified to code 3220.

(ii) Code 4131 (mirror mfg.-mfg. of glass, frames, backs, or handles to be separately rated); in a business that makes mirrors, the work of producing glass, or fabricating frames, backs, or handles must be separately classified.

(iii) Code 8107 (machinery dealer NOC-store or yard & drivers, operations away from premises, other than demonstration or repair, to be separately rated); in a business that is a machinery dealer, work other than demonstrating or repairing the equipment that is not done at the insured’s location must be separately classified.

Rules regarding the assignment of more than one basic classification apply. Refer to paragraph (D)(3) of this rule.

(D) Classification procedures.

The purpose of the classification procedure is to assign the one basic classification that best describes the business of the employer within a state. Subject to certain exceptions described in this rule, each classification includes all the various types of labor found in a business.

It is the business that is classified, not the individual employments, occupations or operations within the business.

Certain exceptions apply and are noted below.

(1) Separate legal entities.

Classification rules apply separately to each legal entity operating in a state even if multiple entities are insured under a single policy

(2) Businesses not described by a classification.

If no basic classification clearly describes the business, the classification that most closely describes the business must be assigned. All the rules pertaining to the assigned basic classification apply to this operation.

(3) Assignment of more than one basic classification.

More than one basic classification may be assigned to an insured who meets conditions set forth in paragraphs (D)(3)(a) to (D)(3)(c) of this rule. Operation means activities, enterprises, processes, secondary businesses or undertakings.

(a) The insured’s principal business is described by a basic classification that requires certain operations or employees to be separately rated.

(b) The insured conducts one or more of the following operations:

(i) Construction or erection.

(ii) Farming.

(iii) Employee leasing, labor contracting, temporary labor services.

(iv) Mercantile business.

(i) For purposes of this rule, an insured is conducting more than one operation in a state if portions of the insured’s operations in that state are not encompassed by the classification applicable to the insured’s principal business. To qualify for a separate classification, the insured’s additional operation must:

(a) Be able to exist as a separate business if the insured’s principal business in the state ceased to exist.

(b) Be located in a separate building, or on a separate floor in the same building, or on the same floor physically separated from the principal business by structural partitions. Employees engaged in the principal business must be protected from the operating hazards of the separate additional operations.

Example of two operations that could qualify as two separate businesses: an insured operates bowling lanes and a movie theater. These distinct operations can qualify as two separate businesses for classification purposes because:

(i) The operations of bowling lanes and movie theaters are not ordinarily conducted as one business, and therefore, are not included within each other’s scope.

(ii) Either the bowling lane (if the movie theater ceases to exist) or the movie theater (if the bowling lane cease to exist) can be expected to continue its operations.

Examples of operations that must be separately classified because they are specifically excluded in the wording of a classification considered to be the insured’s principal business:

(A) Code 0251 (irrigation works operation & drivers); code 0251 and the farm classification cannot be assigned to the same risk unless the operations described by these classifications are conducted as separate and distinct businesses. Irrigation system construction must be separately rated as code 6229.

(B) Code 5059 (iron or steel: erection-frame structures not over two stories in height); code 5040-iron or steel: erection-frame structures cannot be assigned to the same job or location that code 5059 applies to.

(C) Code 8265 (iron or steel scrap dealer & drivers); wrecking or salvaging must be separately rated. This code cannot be assigned to a risk engaged in an operation described by another classification unless the operations subject to Code 8265 are conducted as a separate and distinct business.

(ii) If the separate additional operation is not encompassed in the classification applicable to the insured’s principal business and meets all the conditions listed above in paragraph (D)(3)(c)(1) of this rule, the insured is considered to be engaged in an additional operation. If this is the case, a separate basic classification may be assigned to each operation that qualified as a separate additional operation.

(iii) If the additional operation does not meet all conditions listed above in paragraph (D)(3)(c)(1) of this rule and is not encompassed in the classification applicable to the insured’s principal business and has a rate:

(a) Lower than the insured’s principal business, assign this operation to the same classification as the insured’s principal business.

(b) Higher than or equal to the insured’s principal business, assign this operation to the classification that describes the additional operation.

(iv) Policies with more than one classification may include employees working under several classifications. Payroll assignment for these employees is subject to the interchange of labor rule. Refer to paragraph (F) of this rule.

(d) Construction or erection operations.

These operations are identified by a “circle” immediately following the code number.

Each distinct type of construction or erection operation must be assigned to the class that specifically describes the operation only if separate payroll records are maintained for each operation.

If separate payroll records are not maintained for any construction or erection operation, the highest rated classification that applies to the job or location where the operation is performed must be assigned.

If a construction or erection operation is included in the scope of another classification, a separate code must not be assigned.

(i) Insured subcontractors.

An insured subcontractor who performs a single type of work on a construction project or job just be classified based on the classification that describes the particular work involved.

Example of how to classify the work performed by an insured subcontractor:

The insured subcontractor who performs only excavation work in connection with the construction of a sewer is classified under code 6217 (excavation) rather than under code 6306 (sewer construction).

Exception: all operations in conjunction with concrete construction including making and erecting forms, placing reinforcing steel and stripping forms, when done by subcontractors, must be assigned to the appropriate concrete construction classification.

(ii) Uninsured subcontractors.

Uninsured subcontractors covered under the principal or general contractor’s policy are classified on the basis of the classification that would apply if the work were performed by the principal’s own employees.

Example of how to classify the work performed by an uninsured subcontractor:

The uninsured subcontractor who performs only excavation work, but is covered under the policy of the principal contractor who is performing the construction of a sewer, is classified under code 6306 (sewer construction).

(e) Farm operations.

These operations are identified by a “square” immediately following the code number.

A farm is defined as any parcel(s) of land used for the purpose of agriculture, horticulture, viticulture, dairying, or stock or poultry raising as a business or commercial venture.

If separate payroll records are maintained, a division of payroll is allowed for each separate and distinct type of commercial farm operation.

If payroll records of the farm classification are not clear, and separate payroll records are not maintained, the entire payroll of the farm must be segregated on the basis of proportionate acreages.

Each farm classification includes:

(i) All employees.

(ii) Drivers.

(iii) All normal repair and maintenance of buildings or equipment performed by the employees of the insured.

(iv) Operations usual and incidental to a farm, such as:

(a) Maintenance of cows, hogs or chickens for family use.

(b) A family orchard or truck garden.

(d) Outside domestic workers at the farm location.

Each farm classification excludes inside domestic workers at the farm location.

(f) Employee leasing, labor contractors and temporary labor services.

(i) Workers assigned to clients must be classified the same as direct employees of the client performing the same or similar duties.

(ii) If the client has no direct employees performing the same or similar duties, leased employees are classified as if they were direct employees of the client entity.

Example of how to classify workers assigned to clients of employee leasing companies, labor contractors, and temporary labor services:

The client is a retail store classified to code 8017:

(a) Code 8017 is applicable to the worker assigned as a cashier, just as it is applicable to the client’s employee who works as a cashier.

(b) Code 7380 is applicable to the worker assigned as a delivery truck driver, just as it is applicable to the client’s employee who drives a delivery truck.

(g) Mercantile businesses.

These operations are identified by a “diamond” immediately following the code number.

A mercantile business is any store or dealer engaged in the sale of goods or merchandise, or in the sale of services.

For mercantile businesses, the classification is assigned separately for each location.

Store operations are classified based on the principal type of merchandise sold and whether the operations are wholesale or retail. For purposes of the rule, principal means more than fifty per cent of gross receipts, excluding receipts derived from the sale of lottery tickets.

The following definitions and instructions must be used to determine the appropriate store classification.

(i) Type of merchandise sold.

If a store sells a variety of goods, each of which may be subject to a different classification, the store must be assigned to the classification that best describes the merchandise that generates more than fifty per cent of the gross receipts.

(ii) Wholesale vs. retail.

Retail applies to the sale of merchandise to the general public for personal or household consumption or use and not for resale.

Wholesale applies to the sale of merchandise for resale to others; or sale to manufacturers, builders, contractors, or others for use in their business or as raw materials.

Exception: if a store’s sales are clearly retail in nature, the appropriate retail store classification may be assigned regardless of the definition of retail above.

Examples of store sales that are clearly retail in nature:

(a) A store selling artwork in a shopping mall whose majority of sales are for artwork purchased by businesses.

(b) A store selling art supplies in a shopping mall whose majority of sales are to artists who use the materials in their business.

(iii) Combination of retail and wholesale.

A store that sells merchandise on a combined wholesale and retail basis must be assigned to the appropriate store classification depending on whether the majority of gross receipts come from wholesale or retail sales.

(4) Standard exceptions.

Standard exceptions must be separately classified unless specifically included in a classification assigned to the business.

Classifications for standard exceptions apply even if the basic classification includes phrases such as “all employees” or “all operations.”

Examples of classifications that include “all employees” or “all operations” but do not specifically refer to any standard exception employees:

(a) Code 6260 (tunneling-pneumatic-all operations); this classification does not specifically include any standard exception employees. Those employees are separately classified to codes 8810, 8871, 8742, and 7380.

(b) Code 8829 (convalescent or nursing home-all employees); this classification does not specifically include any standard exception employees. Those employees are separately classified to codes 8810, 8871, 8742, and 7380.

Examples of classifications that specifically include standard exception employees:

(i) Code 4361 (photographer-all employees & clerical, salespersons, drivers); this classification specifically includes clerical employees, salespersons, and drivers. For this type of business, those employees are not separately classified to codes 8810, 8871, 8742, and 7380.

(ii) Code 9061 (club NOC & clerical); this classification specifically includes clerical employees. For this type of business, those employees of this type of business are not eligible for classification to code 8810 or 8871.

(5) Businesses described by a standard exception classification.

If the principal business is described by a standard exception classification, the operations of all employees not included in the definition of standard exception classification must be assigned to the separate basic classification that most closely describes their operation.

Example of principal business that is described by a standard exception code: the insured is a public museum:

(a) Professional and clerical employees are assigned to code 8810.

(b) Maintenance employees are assigned to code 9101.

(6) Classifications limited to separate businesses.

The assignment of certain classifications is limited by their notes to separate and distinct businesses because the notes may describe an operation that frequently is an integral part of a business described by another classification.

Example of assignment of a classification limited by a note:

(a) Code 4511 (analytical chemist, includes laboratory and outside employees); cannot be assigned to a risk engaged in operations described by another classification unless the operations subject to code 4511 are conducted as a separate and distinct business.

(7) Repair operations.

Risks with shop operations that involve the repair of a product for which there is no repair classification are assigned to the classification that applies to the manufacture of the product, unless this repair work is specifically referred to by another classification, footnote, or definition in the manual.

Example of repair operations that are classified to the manufacturing code:

(a) A pump repair business is assigned to code 3612 (pump mfg.). There is no separate code for pump repair.

(b) A motor repair business is assigned to code 3643 (electric power or transmission equipment mfg.). There is no separate code for motor repair.

(8) Recycling operations.

(a) The collection, sorting and handling of recyclable materials for resale to others must be assigned to the appropriate store or dealer classification, or to the classification that most closely describes the business.

(b) Risks with operations that involve the reuse of materials for the production of a new product must be assigned to the classification that applies to the manufacture of the product unless such work is specifically referred to another classification, footnote, or definition in the manual.

(E) Payroll assignment: miscellaneous employees.

(1) Miscellaneous employees who perform duties that are commonly conducted for separate operations that are subject to more than one basic classification must be assigned to the governing classification.

(2) Miscellaneous employees include general superintendents (other than construction superintendents), maintenance or power plant employees, shipping or receiving clerks, and yard workers (other than construction).

Refer to paragraph (D)(5) of this rule if the governing classification is a standard exception.

Example of classification for miscellaneous employees:

The insured has two separate operations, a machine shop (code 3632) on one floor of the building and a plastics manufacturing business (code 4452) on another floor. If it is determined that code 3632 is the governing classification, all elevator operators, porters, cleaners, superintendents, and shipping clerks serving both operations are assigned to code 3632.

(F) Payroll assignment: interchange of labor.

Some employees may perform duties directly related to more than one properly assigned classification according to paragraph (D)(3) of this rule. Their payroll may be divided among the properly assigned classifications provided that:

(1) The classifications can be properly assigned to the employer according to the rules of the classification system, and

(2) The employer maintains proper payroll records, which show the actual payroll by classification for that individual employee.

(a) Records must reflect actual time spent working within each job classification and an average hourly wage comparable to the wage rates for such employees within the employer’s industry.

(b) Estimated or percentage allocation of payroll is not permitted.

Note: if payroll records do not show the actual payroll applicable to each classification, the entire payroll of the individual employee must be assigned to the highest rated classification that represents any part of his or her work.

(3) Payroll for holiday, vacation, sick pay, overtime and all other forms of payroll that are not directly attributable to a specific classification code must be allocated to the classification code with the greatest amount of payroll applicable to the individual employee.

If none of the classification codes applicable to the employee has the greatest amount of payroll, the payroll for holiday, vacation sick pay, overtime and all other forms of payroll that are not directly attributable to a specific classification code must be allocated to the highest rated classification code applicable to the employee.

(4) Some employees qualify for division of payroll between two or more basic classification codes and also engage in operations that are classified by codes 8810, 8742, 8748 or 8871. The payroll for these standard exception operations must be allocated to the basic classification code with the largest amount of payroll applicable to that employee.

Exceptions:

Code 8810 (clerical office employees), code 8871 (clerical telecommuter employees), code 8742 (salespersons, collectors, or messengers-outside) and code 8748 (automobile salespersons) are not available for division of payroll under this rule. However, when an interchange of labor exists between code 8810 and code 8871:

(a) Code 8871 will be assigned when the employee spends more than fifty per cent of the time worked telecommuting as described by paragraph (B)(2)(a)(ii)(c) of this rule.

(b) Code 8810 will be assigned when the employee spends fifty per cent or less of the time worked telecommuting as described by paragraph (B)(2)(a)(ii)(c) of this rule.

The distribution of payroll for the employee may result in no single basic classification code that represents the largest amount of that employee’s payroll. In such cases, the payroll included in the standard exception codes (8810, 8742, 8748 and 8871) will be assigned to the highest rated classification code that represents any part of the employee’s work.

This rule does not apply to miscellaneous employees. Refer to paragraph E of this rule for these employees.

Examples of instances of interchange of labor where an employee’s payroll may be divided between two or more classifications:

(i) In a business that manufactures clocks, all employees must be assigned to either code 3385 (clock mfg.), code 8810 (clerical), code 8742 (salespersons-outside), or code 7380 (drivers). In this example, division of payroll is only allowed for employees whose work is divided between activities described by codes 3385 and 7380. Codes 8810 and 8742 are not eligible for division of payroll.

(ii) In a business that sells furniture, all employees must be assigned to either code 8044 (store: furniture & drivers), code 8810 (clerical), or code 8742 (salespersons-outside). No division of payroll is allowed in this example, since drivers are already included in the basic classifications. Codes 8810 and 8742 are not eligible for division of payroll.

(iii) In a business that manufactures paper and also further processes this paper into wallpaper, all employees must be assigned to either code 4239 (paper mfg.), code 4279 (wallpaper mfg.), code 8810 (clerical), code 8742 (salespersons-outside), or code 7380 (drivers). A division of payroll is allowed for employees whose work is divided among activities described by codes 4239, 4279, and 7380. Codes 8810 and 8742 are not eligible for division of payroll.

HISTORY: Eff 7-27-96; 7-1-97; 7-1-98; 7-1-00; 7-1-02; 7-1-03

Rule promulgated under: RC 111.15

Rule authorized by: RC 4121.12, 4121.121

Rule amplifies: RC 4123.29

4123-17-09 Clerical office payroll.

Clerical office payroll shall include only the payroll of those employees whose duties are confined to keeping the books and records of the risk, and conducting correspondence, and drafting, or who are engaged wholly in office work where such books and records are kept, having no other duties of any nature in or about the risk’s premises.

HISTORY: Replaces rule 4121-7-09; Eff 7-1-62; 12-14-76; 7-24-89; 7-1-93

Rule promulgated under: RC 111.15

Rule authorized by: RC 4121.12, 4121.13, 4121.30

Rule amplifies: RC 4123.29, 4123.34

4123-17-10 Excess premiums.

The administrator of workers’ compensation, with the advice and consent of the workers’ compensation oversight commission, has authority to approve contributions made to the state insurance fund by employers pursuant to sections 4121.121, 4123.29, 4123.32, and 4123.34 of the Revised Code. Pursuant to sections 4123.29 and 4123.34 of the Revised Code. The administrator is required to keep premiums at the lowest level consistent with the maintenance of a solvent state insurance fund and of a reasonable surplus. Pursuant to section 4123.32 of the Revised Code, in the event there is developed as of any given rate revision date a surplus of earned premium over all losses which, in the judgment of the administrator, is larger than is necessary adequately to safeguard the solvency of the fund, the administrator may return such excess surplus to the subscriber to the fund in either the form of cash refunds or a reduction of premiums, regardless of when the premium obligation has accrued. The administrator, with the advice and consent of the workers’ compensation oversight commission, shall have the discretion and authority to determine whether there is an excess surplus of premium; whether to return the excess surplus to employers; the nature of the cash refunds or reduction of premiums; the employers who are subscribers to the state insurance fund who are eligible for the cash refunds or reduction of premiums; the payroll period or periods for which a reduction of premium has accrued and the premium payment for which the reduction of premium applies; the applicable date of the cash refunds or reduction of premiums; and any other issues involving cash refunds or reduction of premiums due to an excess surplus of earned premium.

HISTORY: Eff 10-21-99 (Emer.); 3-30-00 (Emer.); 5-1-00; 4-28-03

Rule promulgated under: RC 119.03

Rule authorized by: RC 4121.12, 4121.121

Rule amplifies: RC 4123.29, 4123.32, 4123.34

R.C. 119.032 review dates: 01/31/2003 and 01/01/2008

4123-17-11 Rule of merit rating controlling the employee having but one eye, one hand, etc.

Should any employee having but one hand, arm, eye, foot or leg thereafter lose any one of the foregoing members in an industrial accident or as the result of an occupational disease the same shall be merit-rated, not as a permanent total disability, but as a permanent partial disability, based upon the loss of the last member only. The remaining cost shall not be charged against the accident experience of the employer.

HISTORY: Replaces rule 4121-7-11; Eff 7-1-62; 7-1-93

Rule promulgated under: RC 111.15

Rule authorized by: RC 4121.12, 4121.13, 4121.30

Rule amplifies: RC 4123.29, 4123.34

4123-17-12 Catastrophe claims.

(A) A “catastrophe” is defined as an occurrence in which two or more employees of one employer are killed or receive injuries resulting in permanent and total disability.

(B) “Catastrophe cost” is defined as the total medical, compensation, and other costs, including reserves for future compensation costs, as a direct result of a catastrophe.

(C) Catastrophe cost in excess of two hundred and fifty thousand dollars shall not be included in the experience of a classification or of an employer.

(D) Catastrophe cost in excess of the catastrophe value from part A of the merit-rated credibility table in effect for the retrospective policy year shall not be included in the annual evaluation or final settlement of that retrospective policy year.

(E) Notwithstanding the provisions of this rule, the administrator may consider any special circumstances which may affect the determination of a catastrophe loss.

HISTORY: Replaces rule 4121-7-12; Eff 8-19-77; 7-1-78; 7-1-79; 7-1-80; 7-1-81; 7-1-82; 7-1-84; 7-1-89; 7-1-90; 7-1-91

Rule promulgated under: RC 111.15

Rule authorized by: RC 4121.121, 4121.13, 4121.30

Rule amplifies: RC 4123.29, 4123.34

4123-17-13 Rule controlling the making of the initial application for rating.

(A) The bureau shall ascertain the amount of premium due from an individual employers is ascertained employer by applying the basic rate for the occupation or employment in which the employer is engaged to the estimated expenditure of wages for the ensuing six months and also for an additional adjustment period of two months; that is, the advance estimate should be made for a period of eight months. Employers are required to file with the bureau of workers’ compensation an application setting forth the name and address of the employer, a description of the work done or industry conducted by the employer, the estimated average number of employees in each kind of work, the estimated total payroll for the ensuing six months, and an estimated total payroll for an additional adjustment period of two months, and such other information as may be requested by the bureau. Upon receipt of the application, the bureau will classify the applicant-employer’s status as to the type of industry or nature of the enterprise with respect to the degree of hazard involved and the bureau shall advise the applicant as to the employer’s classification, rate, and amount of first premium security deposit, calculated on a basis of an estimated expenditure or wages for eight months in advance, and at the same time the bureau will furnish the applicant with an invoice on which to remit payment of such premium security deposit. The bureau shall retain this premium security deposit as an adequate eight-month premium deposit subject to a periodic review by the bureau. The bureau shall return any unearned portion of this deposit to the employer upon cancellation of the coverage, if there is no successor, subject to audit.

(1) On the occasion of instituting coverage under this rule, the employer shall submit an application for coverage that completely provides all the information required for the bureau to establish coverage for the employer. The employer shall, at a minimum, provide the following information:

(a) Legal name of the employer;

(b) Address of the employer;

(d) Business entity type (corporation, L.L.C., sole proprietorship, partnership, etc.);

(e) Information related to whether the applicant for coverage has purchased an existing business or has another associated policy;

(f) Name of the owner or corporate officer, and, where applicable for elective coverage, the name of the sole proprietor, partners, or minister;

(g) Information related to the description of the employer’s operations;

(h) Signature of the person completing the application for coverage.

(2) If the bureau receives an application for coverage that does not contain all of the information required by paragraph (A)(1) of this rule, the bureau will attempt to contact the employer to obtain the required information. If the applicant does not provide the required information, the bureau shall deny the employer’s application for coverage based upon the employer’s failure to provide all the information required by paragraph (A)(1) of this rule.

(3) An employer’s coverage shall begin at the time the bureau receives the application for coverage that completely provides all the information required for the bureau to establish coverage for the employer and the minimum security deposit required by rule 4123-17-16 if the Administrative Code. The employer’s coverage is subject to the bureau’s verification of the application for coverage. If the bureau is required to contact the employer to obtain any of the information required by paragraph (A)(1) of this rule and the bureau obtains the required information, the employer’s coverage shall remain effective from the time of the receipt of the application. If the applicant does not provide the required information, the bureau shall deny the employer’s application for coverage from the time of the application. When an applicant fails to provide the information required by paragraph (A)(1) of this rule and has employed one or more persons, the employer may be considered a non-complying employer under rule 4123-14-01 of the Administrative Code, and the bureau may recover premium and penalties from the employer under rule 4123-14-02 of the Administrative Code.

(B) New coverage shall be granted upon receipt of a written binder when deemed to be in the best interest of the risk and the bureau. Such binder shall be granted by the administrator or his designee. The binder shall be effective for the period of thirty days from the date of issuance and cannot be renewed. The premium security deposit must be billed by the bureau and paid by the risk before the thirty days expire. Payroll reports and premium charges shall coincide with the effective date of said binder.

(C) If the bureau determines, after reviewing the information submitted with the application provided for in paragraph (A) of this rule, that the employer is essentially the same employer regardless of entity type for which risk coverage previously had been provided, the bureau may transfer the prior risk coverage to the employer and the employer shall assume any outstanding obligations under the prior risk coverage. The bureau may reactivate a previously cancelled risk coverage in order to complete this transfer.

Effective: 12/20/2007

R.C. 119.032 review dates: 10/05/2007 and 12/20/2012

Promulgated Under: 119.03

Statutory Authority: 4121.12, 4121.121, 4121.13, 4121.30

Rule Amplifies: 4123.29, 4123.32, 4123.34

Prior Effective Dates: 7/1/62, 10/1/79, 9/1/93, 7/27/06

4123-17-14 Rule controlling the completing of payroll reports.

(A) In July and January of each year, the bureau will furnish private state fund employers with proper forms showing premium rates on which to report the actual wage expenditure and/or payroll in the conduct of the employer’s operations for the preceding six months’ period or portion thereof. The employer shall complete such report with the premium calculated, and the report and remittance of the premium shall be submitted to the bureau no later than August thirty-first or the last day of February for that report’s preceding six-month period.

(1) Except where the administrator has announced prior to the due date of the premium payment that an employer may pay the premium in installments, the amount of the premium due is to be paid in accordance with paragraph (A) of this rule or at the expiration of the coverage for early coverage terminations.

(2) The administrator may determine for any payroll period that employers shall be permitted to pay the premium in two installments and the method of those premium installment payments. An employer electing to participate in this option shall pay one-half of the premium due by the regular due date in accordance with paragraph (A) of this rule and the balance of the premium by the invoiced date following the original due date. An employer participating in this payment option shall be considered a complying employer during the installment payments if the employer pays one-half of the premium by the regular due date, and the balance shall not be subject to penalties or interest under rule 4123-19-07 of the Administrative Code.

(B) For all counties and public employer taxing districts, by January first of each year, the bureau will furnish the county auditor of each county and the chief fiscal officer of each public employer taxing district in each county with proper forms showing premium rates on which to report the actual wage expenditure or payroll expended in the conduct of the employer’s operations for the preceding twelve calendar months. Such report shall be completed and the premium calculated on the report, and each such employer shall return the report and remit the amount of premium due to the bureau as follows:

(1) On or before May fifteenth of each year, no less than forty-five per cent of the premium due.

(2) On or before September first of each year, no less than the total premium due.

(C) The terms “payroll” and “wage expenditures” as used in the rules of this chapter of the Administrative Code shall include the entire remuneration allowed by an employer to employees in the employer’s service for the applicable period. “Remuneration” shall have the same meaning as defined in division (H) of section 4141.01 of the Revised Code as provided by the statutes of the Ohio bureau of employment services, in order that the payroll reporting requirements of the bureau of workers’ compensation shall be coordinated with the remuneration reporting requirements of the Ohio bureau of employment services, except as otherwise modified by the rules of this chapter. The definition of remuneration shall apply to all amenable employers who are required or elect to obtain Ohio workers’ compensation coverage and who pay premiums based upon payroll under Chapter 4123. of the Revised Code, and shall apply to all persons of such employers considered to be employees under the statutes or rules of the bureau of workers’ compensation, regardless of whether the employer is required to report payroll or remuneration to the Ohio bureau of employment services under Chapter 4141. of the Revised Code or whether the employer reports payroll or remuneration to the Ohio bureau of employment services for such persons considered to be employees by the bureau of workers’ compensation.

(D) In determining the reportable payroll or remuneration after July 1, 1995, for employees who customarily receive tips or gratuities, the employer shall report all actual wages paid and shall include all tips to the extent they are used to supplement the federal minimum wage requirements reportable as remuneration as defined in paragraph (C) of this rule.

HISTORY: Eff 7-1-62; 11-26-79; 12-14-92; 7-1-93; 12-23-93 (Emer.); 3-19-94; 1-9-95; 7-24-95; 6-30-03 (Emer.); 8-8-03

Rule promulgated under: RC 119.03

Rule authorized by: RC 4121.30, 4121.12

Rule amplifies: RC 4123.24, 4123.26, 4123.29, 4123.32, 4123.34

R.C. 119.032 review dates: 05/23/2003 and 03/01/2008

4123-17-14.1 Misrepresentation of payroll.

(A) No employer shall knowingly misrepresent to the bureau of workers’ compensation the amount of classification of payroll upon which the premium under this chapter is based. No self-insuring employer shall knowingly misrepresent to the bureau the amount of paid compensation paid by such employer.

(B) As used in the rule, “knowingly” means that the employer had actual knowledge of the misrepresentation and was aware that the misrepresentation would cause a certain result. An employer will not be deemed to have knowingly misrepresented its payroll, its classification of payroll, or its paid compensation where the employer’s determination of how to report was:

(1) Based on the employer’s reasonable interpretation of a law, rule, or manual classification.

(2) Based on prior reporting instructions or written advice received from the bureau.

(C) Whenever the bureau of workers’ compensation finds that an employer violated division (A) of section 4123.25 of the Revised Code by knowingly misrepresenting its payroll or classification of payroll to the bureau, the administrator or the administrator’s designee may impose a penalty upon the employer as follows:

(1) For the first offense, five-hundred dollars or twenty-five percent of the amount of the difference between the premium the employer paid and the amount the employer should have paid, whichever is higher.

(2) For a second offense, up to ten times the amount of the difference between the premium the employer paid and the amount the employer should have paid.

(D) Whenever the self-insuring employers evaluation board finds that a self-insuring employer violated division (B) of section 4123.25 of the Revised Code by knowingly misrepresenting its paid compensation to the bureau, the self-insuring employers evaluation board may impose a penalty upon the employer as provided under section 4123.25 of the Revised Code.

(E) Except for a self-insuring employer, an employer may appeal a penalty imposed under this rule to the adjudicating committee under section 4123.291 of the Revised Code.

R.C. 119.032 review dates: 09/09/2004 and 03/01/2008

Promulgated Under: 119.03

Statutory Authority: 4121.12, 4121.121

Rule Amplifies: 4123.25

Prior Effective Dates: 10/14/02

4123-17-14.2 Bureau 50/50 program.

(A) Pursuant to division (A)(3) of section 4123.29 of the Revised Code and paragraph (A)(2) of rule 4123-17-14 of the Administrative Code, the administrator is authorized to develop and make available to employers who are paying premiums to the state insurance fund alternative premium plans, which may include, as the administrator may determine for any payroll period, that employers shall be permitted to pay the premium in two installments.

(B) Where the administrator determines for any payroll period that employers shall be permitted to pay the premium in two installments, the only method of reporting payroll and making the initial premium installment payment for this program shall be through the bureau’s website, ohiobwc.com, using the payroll reports 50/50 payment plan service offering. All payroll for the reporting period and payment information for the initial installment shall be entered in the service offering in the same online session.

(C) An employer electing to participate in this premium payment option shall report its payroll and pay one-half of the premium due by the regular due date in accordance with paragraph (A) of rule 4123-17-14 of the Administrative Code. The balance of the premium shall be paid through the bureau’s website, ohiobwc.com, using the accounts receivable balance service offering. The balance shall be paid by the first day of May for the July 1 to December 31 reporting period, or by the first day of November for the January 1 to June 30 reporting period.

(D) An employer participating in this payment option shall be considered a complying employer during the installment payments if the employer reports payroll and pays one-half of the premium by the method prescribed in paragraph (B) of this rule by the regular due date, and the balance shall not be subject to penalties or interest under rule 4123-19-07 of the Administrative Code. If, by the regular due date, an employer does not report payroll and pay one-half of the premium by the method prescribed in paragraph (B) of this rule or does not otherwise report payroll and pay the full premium due, the employer’s coverage will be lapsed and the employer shall be subject to penalties and interest. If an employer participating in this payment option does not pay the balance of the employer’s premium by the prescribed method and by the date such balance is due, the employer’s coverage will be lapsed effective the date such balance is due.

(E) Any employer that fails to utilize the bureau’s website for this premium payment program as required in paragraphs (B) and (C) of this rule shall not be permitted to participate in the installment premium option provided in this rule.

Effective: 07/01/2006

Promulgated Under: 111.15

Statutory Authority: 4121.12, 4121.121, 4121.30

Rule Amplifies: 4123.29, 4123.34

4123-17-15 Professional employer organization (PEO) agreements.

(A) This rule is promulgated pursuant to Chapter 4125 of the Ohio Revised Code.

(1) “Professional employer organization” or “PEO” means a sole proprietor, partnership, association, limited liability company, or corporation that enters into an agreement with one or more client employers for the purpose of coemploying all or part of the client employer’s workforce at the client employer’s work site. “Professional employer organization” or “PEO” does not include a temporary service agency.

(2) “Client employer” means a sole proprietor, partnership, association, limited liability company, or corporation that enters into a PEO agreement and is assigned shared employees by the PEO. “Client employer” does not mean an employer who is a noncomplying employer as defined in rule 4123-14-01 of the Administrative Code.

(3) “Coemploy” means the sharing of the responsibilities and liabilities of being an employer.

(4) “Shared employee” means an individual intended to be assigned to a client employer on a permanent basis, not as a temporary supplement to the client employer’s workforce, who is coemployed by a professional employer organization and a client employer pursuant to a professional employer organization agreement.

(5) “Temporary service agency” means an employer which is in the business of employing individuals for the purpose of utilizing the services of the individuals for a temporary period of time.

(6) “PEO agreement” means a written contract to coemploy employees between a professional employer organization and a client employer with a duration of not less than twelve months. The agreement is intended to be, or is, ongoing rather than temporary in nature.

(B) A PEO must perform the following functions:

(1) Provide written notice to each shared employee it assigns to a client employer of the relationship between and the responsibilities of the PEO and the client employer;

(2) Assume responsibility for payment of wages, related taxes and workers’ compensation premiums for shared employees as established within the PEO agreement. The responsibility of making the payment is not contingent on receipt of payment from client;

(3) Be responsible for maintaining both adequate and required employment-related records for employees, and for reporting such information as may be required by appropriate governmental agencies;

(4) Comply with applicable state laws regarding workers’ compensation insurance coverage.

(5) Maintain complete records, separately listing the payroll and claims of its client employers for each payroll reporting period. The payroll shall be kept in a manner that clearly identifies the appropriate manual classifications assigned to each client employer to which the payroll should be reported and the amount of premiums paid. Claims shall be separately identified according to the client employer.

(6) Maintain workers’ compensation coverage, pay all workers’ compensation premiums and manage all workers’ compensation claims, filings, and related procedures associated with a shared employee in compliance with Chapters 4121. and 4123. of the Revised Code, except that when shared employees include family farm officers, ordained ministers, sole proprietors, partners, individuals incorporated as a corporation, or corporate officers of the client employer, payroll reports shall include the entire amount of payroll associated with those persons;

(7) When the payroll of family farm officers, ordained ministers, sole proprietors, partners, individuals incorporated as a corporation or corporate officers of a client employer is reported under the PEO’s policy, it will not be subject to the payroll reporting limitations pursuant to rules 4123-17-07 and 4123-17-30 of the Administrative Code if the PEO reports wages for the client employer under the PEO policy.

(8) Within fourteen days after receiving notice from the bureau of workers’ compensation that a refund or rebate will be applied to workers’ compensation premiums, provide a copy of that notice to any client employer to whom that notice is relevant.

(1) Each client employer must establish and maintain an individual account with the bureau.

(2) The PEO shall be considered the succeeding employer, solely for purpose of workers’ compensation experience, and shall be subject to rule 4123-17-02 of the Administrative Code, basic or manual rate, whereby all or part of the experience of the client employer is transferred to the PEO policy for rate making purposes.

(3) If the PEO agreement between a PEO and a client employer is terminated, or if the PEO declares bankruptcy or ceases operation in Ohio, the PEO must notify the bureau and each client associated with that PEO within fourteen days from the effective date of termination and identify on the UA-3, AC-18 and AC-19 forms the portion of the experience of the PEO related to the client employer shall be transferred to the client employer.

(D) A PEO shall notify the bureau within thirty days when entering into or changing the type of PEO agreement using the UA-3 PEO notification form. The PEO shall complete the form in its entirety and indicate if the claims and payroll will be reported under the PEO’s policy or the client employer’s policy and also listing the manual classifications for the client employer if payroll is to be reported under the PEO policy. If the bureau is not notified within the thirty days, the bureau will recognize the PEO agreement on the date the bureau receives the UA-3 form and the client employer shall be responsible for reporting payroll and claims under the client employer’s individual policy until the recognized effective date of the agreement.

(E) A PEO which enters into a PEO agreement with a noncomplying employer or a PEO which fails to comply with this rule shall not be considered the employer for workers’ compensation purposes. In these instances the payroll of the shared employees shall be reported by the client employer under its workers’ compensation risk number for workers’ compensation premium and claims purposes, unless prohibited by Federal law. Claims that are filed by the client employer’s shared employees shall be charged to the experience of the client employer.

(F) The bureau will not recognize a PEO agreement between a PEO and an out of state client employer where the employees of the out of state client employer does not meet the jurisdictional requirements to receive Ohio workers’ compensation benefits as provided in section 4123.54 of the Revised Code.

(G) The PEO shall register with the bureau not later than thirty days after the effective date of Chapter 4125. of the Revised Code or not later than thirty days after the formation of a PEO, whichever date occurs later. A PEO operating in this state shall register annually with the administrator of the bureau of workers’ compensation on forms provided by the administrator.

(1) The PEO shall submit an initial registration fee in the amount of one hundred dollars and a renewal fee of twenty five dollars for each PEO policy to the bureau on or prior to December 31st of each year. An increase of the fee for any year shall not exceed thirty percent.

(2) The PEO shall submit to the bureau all information as required in section 4125.05 of the Revised Code when registering with the bureau:

(a) A list of each of the professional employer organization’s client employers current as of the date of registration for purposes of initial registration or current as of the date of annual registration renewal, or within fourteen days of adding or releasing a client, that includes the client employer’s name, address, federal tax identification number, and bureau of workers’ compensation risk number;

(b) The name or names under which the professional employer organization conducts business;

(c) The address of the professional employer organization’s principal place of business and the address of each office it maintains in this state;

(d) The professional employer organization’s taxpayer or employer identification number;

(e) A list of each state in which the professional employer organization has operated in the preceding five years, and the name, corresponding with each state, under which the professional employer organization operated in each state, including any alternative names, names of predecessors, and if known, successor business entities.

(H) Except to the extent necessary for the administrator to administer the statutory duties of the administrator and for employees of the state to perform their official duties, all records, reports, client lists, and other information obtained from a PEO under paragraph (G) of this rule are confidential and shall be considered trade secrets and shall not be published or open to public inspection. “Trade secret” has the same meaning as in section 1333.61 of the Revised Code.

(I) When an employer contacts the bureau of workers’ compensation to determine whether a particular professional employer organization is registered, if the administrator has denied or revoked that professional employer organization’s registration or rescinded its status as a coemployer, and if all administrative appeals are not yet exhausted when the employer inquires, the appropriate bureau personnel shall inform the inquiring employer of the denial, revocation, or rescission and the fact that the professional employer organization has the right to appeal the administrator’s decision.

(J) Except as permitted in paragraph (K) of this rule, a PEO shall provide security in the form of a bond or letter of credit assignable to the bureau not to exceed an amount equal to the workers’ compensation premiums and assessments incurred for the two most recent payroll reporting periods pursuant to paragraph (A) of rule 4123-17-14 of the Administrative Code, prior to any discounts or dividends.

(1) The amount of security required for each PEO policy shall be evaluated annually.

(2) The security shall be provided to the bureau annually on or prior to the 31st day of December.

(3) The administrator shall determine the amount of security for a PEO policy that has not paid premiums and assessments in the two most recent payroll periods.

(4) A PEO may appeal the amount of the security required pursuant to this section in accordance with section 4123.291 of the Revised Code.

(K) As an alternative to providing security in the form of a bond or letter of credit, the administrator shall permit a PEO to make advance payments of premiums and assessments to the bureau or to submit proof of being certified by either a nationally recognized organization approved by the administrator that certifies PEOs or by a government entity approved by the administrator.

(1) A PEO electing to make advance payments of premiums and assessments shall make such payments by utilizing the bureau’s online payment system. The PEO electing to make advance payments of premiums and assessments shall report the estimated payroll and pay the premiums for the month by the fifth day of that month.

(2) A PEO electing to make advance payments of premiums and assessments who fails to report payroll and pay premiums timely pursuant to paragraph (K)(1) of this rule shall provide to the bureau security in the form of a bond or letter of credit and may not be permitted to utilize the advance payment option for a minimum of the remainder of the policy year. Subsequent failure to report payroll and pay premiums timely utilizing the advance payment option may result in forfeiture of this option and require a posting of bond or letter of credit.

(3) A PEO the administrator has recognized as being certified by a nationally recognized organization or government entity must notify the bureau within fourteen days of losing that certification.

(L) The Administrator may deny registration or revoke the registration of a PEO and rescind its status as a coemployer upon finding that the PEO has done any of the following:

(1) Obtained or attempted to obtain registration through misrepresentation, misstatement of a material fact, or fraud;

(2) Misappropriated any funds of the client employer;

(3) Used fraudulent or coercive practices to obtain or retain business or demonstrated financial irresponsibility;

(4) Failed to appear, without reasonable cause or excuse, in response to a subpoena lawfully issued by the administrator;

(5) Failed to comply with the requirements in accordance with this rule.

(M) The administrator’s decision to deny or revoke a PEO’s registration or to rescind its status as a coemployer is stayed pending the exhaustion of all administrative appeals by the PEO.

(N) Upon revocation of the registration of a PEO, each client employer associated with that PEO shall file payroll reports and pay workers’ compensation premiums directly to the administrator on its own behalf at a rate determined by the administrator based solely on the claims experience of the client employer.

HISTORY: Eff 7-1-97; Replaces: 4123-17-15, eff. 11-22-04

Rule promulgated under: RC 119.03

Rule authorized by: RC 4121.121, 4121.30, 4123.05

Rule amplifies: RC 4123.01, 4123.29, 4123.32, 4123.34

R.C. 119.032 review dates: 03/01/2008

4123-17-16 Premium security deposit.

(A) Each employer, on the occasion of instituting coverage under Chapter 4123. of the Revised Code, shall submit a premium security deposit.

(B) A premium security deposit shall be in an amount equal to thirty per cent of the employer’s semiannual premium obligation based on the employer’s estimated expenditure for wages for a six-month period, plus thirty per cent of the employer’s premium obligation for an additional two-month adjustment period, but in no event shall the premium security deposit collected from an employer be less than ten dollars or more than one thousand dollars.

(C) The bureau of workers’ compensation shall review the security deposit of every employer who has submitted a deposit of less than one thousand dollars. If, in the opinion of the bureau, the amount of any such employer’s deposit is less than the amount due under the law, the bureau may require the employer to submit such additional amount as it shall deem necessary, up to the maximum of one thousand dollars.

(D) The premium security deposit collected from an employer shall entitle the employer to the benefits of Chapter 4123. of the Revised Code for the remainder of the six-month payroll reporting period during which such deposit is collected, and for an additional adjustment period of two months from the close of such six-month period. Thereafter, if the employer pays the premium due at the close of any six-month period, coverage shall be extended for an additional eight-month period, beginning from the end of the six-month period for which the employer pays the premium due.

Replaces: 4121-7-16

R.C. 119.032 review dates: 09/09/2004 and 03/01/2008

Promulgated Under: 119.03

Statutory Authority: 4121.12, 4121.13, 4121.30

Rule Amplifies: 4123.32, 4123.34, 4123.36

Prior Effective Dates: 11/26/79, 9/1/93

4123-17-17 Auditing and adjustment of payroll reports.

(A) Every employer amenable to the workers’ compensation law shall keep, preserve and maintain complete records showing in detail all expenditures for payroll and the division of such expenditures in the various divisions and classifications of the employer’s business. Such records shall be preserved for at least five years after the respective time of the transaction upon which such records are based.

(B) All books, records, papers, and documents reflecting upon the amount and the classifications of the payroll expenditures of an employer shall be kept available for inspection at any time by the bureau of workers’ compensation or any of its assistants, agents, representatives or employees. If any private fund, county, or public employer taxing district employer fails to keep, preserve and maintain such records and other information reflecting upon payroll expenditures, or fails to make such records and information available for inspection, or fails to furnish the bureau or any of its assistants, agents, representatives or employees, full and complete information in reference to expenditures for payroll when such information is requested, the bureau may determine upon such information as is available to it the amount of premium due from the employer and its findings shall constitute prima facie evidence of the amount of premium due from the employer.

(C) The bureau shall have the right at all times by its members, deputies, referees, traveling auditors, inspectors or assistants to inspect, examine or audit any or all books, records, papers, documents and payroll of private fund, county, or public employer taxing district employers for the purpose of verifying the correctness of reports made by employers of wage expenditures as required by law and rule 4123-17-14 of the Administrative Code. The bureau shall also have the right to make adjustments as to classifications, allocation of wage expenditures to classifications, amount of wage expenditures, premium rates or amount of premium. No adjustments, however, shall be made in an employer’s account which result in reducing any amount of premium below the amount of contributions made by the employer to the fund for the periods involved, except in reference to adjustments for the semi-annual or adjustment periods ending within twenty-four months immediately prior to the beginning of the current payroll reporting period. Except as provided in rule 4123-17-28 of the Administrative Code, no adjustments shall be made in an employer’s account which result in increasing any amount of premium above the amount of contributions made by the employer to the fund for the periods involved, except in reference to adjustments for the semi-annual or adjustment periods ending within twenty-four months immediately prior to the beginning of the current payroll reporting period. The twenty-four month period shall be determined by the date when such errors affecting the reports and the premium are brought to the attention of the bureau by an employer through written application for adjustment or from the date that the bureau provides written notice to the employer of the bureau’s intent to inspect, examine, or audit the employer’s records.

(D) Experience will not be recalculated unless there is an adjustment of an employer’s account due to a reclassification of operations. In such event the experience will be recalculated for the same period as the adjustment of the employer’s account.

(E) Where the bureau has assigned two or more classifications for an employer’s operations, the employer shall keep an appropriate record showing a correct and verifiable segregation of all payroll into such classifications. If it is found that the employer has failed to keep such record, the part of the payroll which cannot be reasonably determined by the bureau as belonging to any other classification shall be placed by the bureau under the assigned classification having the highest rate, and the employer will be assessed premium accordingly. To such payroll as is expended after the employer has been notified of these requirements and which is not segregated as herein provided, the highest rate of the employer’s assigned classifications shall be applied.

Effective: 07/01/2006

Promulgated Under: 111.15

Statutory Authority: 4121.12, 4121.121, 4121.30

Rule Amplifies: 4123.24, 4123.26, 4123.29, 4123.34, 4123.41

Prior Effective Dates: 7/1/62, 12/14/76, 12/11/92, 1/1/02, 10/1/05

4123-17-18 Employer premium discount rate.

(A) Any private fund employer that is in compliance with section 4123.35 of the Revised Code, except those that are self-insuring, may be eligible for a discount on premium rates. The premium discount rate shall be determined by the bureau of workers’ compensation and shall apply only to the prospective premium rate of the qualified employer.

(1) In order to qualify for a premium discount rate, the eligible employer must meet the following criteria:

(a) The employer must not have incurred a compensable injury for one calendar year or more; and

(b) The employer shall maintain an employee safety committee or similar organization or make periodic inspections of the work place. If a discount is granted and a claim for a compensable injury or disease subsequently is filed for the calendar year n which the discount is based, the employer’s premium rate shall be increased by the amount of the discounted premium rate.

(2) For the purpose of this rule, “compensable injury” includes all claims whether for injury, occupational disease, or death, in which payment has been made for either compensation or medical benefits pursuant to sections 4123.56 to 4123.59 or section 4123.66 of the Revised Code.

(3) The bureau of workers’ compensation, with the cooperation of the division of safety and hygiene, may investigate employers for compliance with the criteria of this rule. To assist in this matter, the division of safety and hygiene shall maintain a list of employers that have establi