Worker's Compensation Scholarly Activity Essay
Running head: WORKERS COMPENSATION 1
Workers Compensation
Robert Ricks III
Columbia Southern University
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WORKERS COMPENSATION 2
Abstract
In this paper, I will be discussing the exceptions to the governing classification
and single enterprise rule in Mississippi. There are four governing classifications, and they each
have their own definition and understanding on how they should be used as exceptions. The state
has reject all four exceptions for the business. I will be discussing each individual exception and
how it can be used, as well as how it can be used for the business itself.
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WORKERS COMPENSATION 3
Introduction
The governing classification is used to describe the particular employer’s workers or
payroll employees. This classification describes what kind of job/business that the employer is.
Not all employees fit into this classification which is why there are four exceptions to this rule.
These exceptions include the standard exception classifications, the interchange of labor rules,
the general exclusion classes, and the multiple enterprise rule (Boggs, 2011).
Standard Exception
Some duties/activities are considered so common to most business and such duties may
be so far outside the operational activities of the business that employees engaged in certain jobs
are considered exceptions to the governing classification rules (Boggs, 2011). The standard
exception class of employees is not included in the original governing classification; therefore, it
is rated separately. The standard exception classes include clerical employees, clerical
telecommuter, drafting employees, salespersons, and drivers (Boggs, 2011.)
Interchange of Labor
The next exception to the governing classification rule is the “interchange of labor” rule.
Each state differs on how this exception actually applies. Some states apply the rule to every
business type within the state, but a few strictly limit it to jobs within the construction field. This
rule allows for an employee to have the ability to utilize more than one class code for his or her
field. This in turn creates a lower premium, which lessens the amount of money being used for
coverage each month or cycle. If this rule did not exist, then the employee would possibly be
placed in a classification that had the maximum rate for his or her job. This rule allows for the
business to only be charged by what the employee will actually encounter within a work day. For
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WORKERS COMPENSATION 4
instance, an employee in the construction industry who does framing work (5645) and hardwood
floor installation (5437) can see his payroll divided between these different operations and
realize a reduction in premium provided the following specific provisions are met:
• All classifications used for an employee are appropriate to the job performed;
• Payroll records exist that allocate the employee’s wages between/among the different
classes. This requires an actual, dollar amount payroll split, a percentage of payroll is not
allowed; and
• The division of payroll is not available with any of the standard exception
classifications (with the possible exception of the driver code) (Boggs,2008).
General Exclusion Classifications
In some cases, the activities of a job do not fit into any of the rules of the governing
classification. Some jobs require duties that are done less often than others but still needs to be
covered. This rule allows for these types of jobs to be covered. These situations are called
general exclusions. This rule is the opposite of the standard rule. On the policy, itself, this rule
will be listed separately and often carry a high premium. Since these exclusions are considered to
be sporadic, the premium for these are much higher than would be the standard exception.
Operations and activities falling within the general exclusion classification are:
• Employees working in aircraft operations;
• Employees performing new construction or alterations;
• Stevedoring employees;
• Sawmill operation employees; and
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WORKERS COMPENSATION 5
• Employees working in an employer-owned daycare (Boggs, 2008)
Multiple enterprise rule
When there are two separate business under the same company, but are not performing
the duties in the same class code, creates a separate issue. The multiple enterprise rule fixes this
issue, allowing for an enterprise to operate two or more business with separate payrolls to be
provided with the appropriate class codes for the specific jobs involved. This rule is especially
important in this case because an enterprise is supposed to automatically receive this exception if
there are two separate entities with the second location yielding the same or more
production/profit. With our two locations achieving this statute, the rejection of the ruling should
be reviewed and overturned. Additionally, employers that qualify for separation of payrolls under
the multiple enterprise rule may also be able to benefit from the application of the interchange of
labor rule presented above, based on the state (Boggs, 2011).
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References
Boggs, C. J. (2011). The insurance professional's practical guide to workers'
compensation: From history through audit (2nd ed.). San Diego, CA: Wells Media Group. Boggs, C.J. (2008). Workers’ Compensation Audit Conclusion. Retrieved from
http://www.mynewmarkets.com/articles/93835/workers-compensation-audit-conclusion
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