Workers Compensation Misclassification Laborers International Union of North America Construction Department.
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Workers’ CompensationMisclassification
Laborers’ International Union of North AmericaConstruction Department
Missouri Contractors’ Credit Premium Adjustment Program (Construction only)
Average Hourly Wage CreditLess than $16.00 0.00%$16.00 to $16.49 0.70%$16.50 to $16.99 2.70%$17.00 to $17.49 4.70%$17.50 to $17.99 6.50%$18.00 to $18.49 8.30%$18.50 to $18.99 9.90%$19.00 to $19.49 11.50%$19.50 to $19.99 13.00%$20.00 to $20.49 14.40%$20.50 to $20.99 15.70%$21.00 to $21.49 17.00%$21.50 to $21.99 18.20%$22.00 to $22.49 19.40%
Discount Comparison Table for 2005
Average Hourly Wage Credit$22.50 to $22.99 20.50%$23.00 to $23.49 19.40%$23.50 to $23.99 22.60%$24.00 to $24.49 23.50%$24.50 to $24.99 24.50%$25.00 to $25.49 25.40%$25.50 to $25.99 26.30%$26.00 to $26.49 27.10%$26.50 to $26.99 27.90%$27.00 to $27.49 28.70%$27.50 to $27.99 29.40%$28.00 to $28.49 30.10%$28.50 to $28.99 30.80%$29.00 to $29.49 31.50%$29.50 to $29.99 32.10%
Discount Comparison Table for 2005
Illinois Workers’ Compensation Statistics
• 7th highest in wages • 23rd highest in premium rates• 37th highest in injury rates
Source: 2004 Annual Report
The Labor Ready Story
• Information was obtained from the monopolistic States of – Ohio– West Virginia– Washington
Ohio
• Labor Ready construction workforce misclassified as:– Retail store employees: 10.2%– Clerical office employees: 8.8%
Washington
• Labor Ready construction workforce misclassified as:– Office services employees: 47%
West Virginia
• Labor Ready construction workforce misclassified as:– Miscellaneous repair and maintenance
(includes piano tuning, taxidermists, chain saw repair, lawn mower repair, firearm repair)
West Virginia Piano Tuners or Construction Workers
• Larry Richards dispatched by Labor Ready to 126 construction/landscaping projects
• 99 times classified as a taxidermist/ piano tuner at $1.11 per $100 of payroll
• Construction trades workers’ compensation rate is minimum $10 per $100 of payroll.
Source: The Sunday Gazette-mail, Charleston, WV
Economic Impact of Misclassification in Ohio
% of Payroll0.43%
10.86%-10.43%
Number of Employees Hourly Wage Hours per Year Annual Payroll Underpayments100 $10 2000 $2,000,000 -10.43% -$208,600.00100 $20 2000 $4,000,000 -10.43% -$417,200.00
% of Underpayment due to misclassificationHypophetical Analysis
OhioWorkers' Compensation InsuranceClerical EmployeesLandscape Gardening and Drivers
$/per hour $0.08$2.16-$2.08
Number of Employees Hourly Wage Hours per Year Total Hours Underpayments100 $10 1500 150,000 -$2.08 -$312,000.00100 $10 2000 200,000 -$2.08 -$416,000.00
WashingtonWorkers' Compensation InsuranceOffice Services EmployeesConstruction Services$ Underpayment due to misclassificationHypophetical Analysis
Economic Impact of Misclassification in Washington
Economic Impact of Misclassification in West Virginia
*includes piano tuning, taxidermists, chain saw repair, lawn mower repair, firearm repair
% of Payroll1.11%
10.00%-8.89%
Number of Employees Hourly Wage Hours per Year Annual Payroll Underpayments100 $10 2000 $2,000,000 -8.89% -$177,800.00100 $20 2000 $4,000,000 -8.89% -$355,600.00
Hypophetical Analysis
West VirginiaWorkers' Compensation InsuranceMiscellaneous Repair and Maintenance *Construction Trades (minimum)% of Underpayment due to misclassification
Misclassification Example
• The Tenth Diamond Inc. and Astech Corp. are both owned by the same owner in Charleston, WV– Tenth Diamond, Inc. is classified as General
Construction contractor paying $9 per $100 of payroll– Astech Corp. is classified as Asbestos Removal
contractor paying $48 per 100 of payroll, but has no employees
• Astech leased all employees from Tenth Diamond, Inc.
• The State of WV claims that Astech/Tenth Diamond owes the state $800,000 in workers’ compensation premiums.
NCCI Manual Premium Rates
IL MOIron or Steel Erection
Metal Bridges - 5040 33.40% 22.55%
Dam or Lock Construction Concrete Work - 6017 18.48% N/A Earth Moving - 6018 4.74% N/A
Excavation and DriversRoad, dam and tunnel construction -6217 6.23% 5.24%
Street or Road Construction Paving or Repaving - 5506 8.52% 6.32%
Taxidermist 2.14% 1.68%
NCCI Manual Premium Rates (% of payroll)
NCCI Manual Premium RatesEffects of Misclassification
NCCI Manual Premium RatesIL MO
33.40% 22.55%4.74%
2.14%
Number of Employees Hourly Wage Hours per Year Annual Payroll % Underpayment Underpayments100 $10 2000 $2,000,000 -28.66% -$573,200.00100 $20 2000 $4,000,000 -28.66% -$1,146,400.00
Number of Employees Hourly Wage Hours per Year Annual Payroll % Underpayment Underpayments100 $10 2000 $2,000,000 -20.41% -$408,200.00100 $20 2000 $4,000,000 -20.41% -$816,400.00
Hypophetical Analysis of Misclassification of Ironworkers for Taxidermists in Missouri
Ironworkers - (Metal Bridges -5040) Dam or Lock Construction (Earth Moving - 6018) Taxidermist Hypophetical Analysis of Misclassification of Ironworkers for Earth Moving Workers in Illinois
Percent of Payroll
Conclusion
• Workers’ Compensation Misclassification costs legitimate contractors, jobs.
• States and insurance companies need more enforcement and penalties.
Workers’ CompensationMisclassification
Laborers’ International Union of North AmericaConstruction Department
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