Legal Issues Pertaining to Street Sweeping
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Legal Issues Pertaining to Street Sweeping |
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Correct Classification of Workers' Comp Categoriesby Ranger Kidwell-Ross, M.A. The power sweeping industry has long been put at an economic disadvantage in that the only Worker's Comp. classification nationally is that of "street sweeper." Now, thanks to a clarification in California statutes, contractors around the U.S. will be able to make a case for separating their company into two Workers' Comp. classifications instead of just the one. Before you do so, however, be sure to check into the initial rate associated with each!
Note that 35 U.S. states receive either guidance or a mandate on rates and Workers' Comp. classifications from an organization called the National Council on Compensation Insurance (NCCI). This organization gathers data, analyzes industry trends, and prepares objective insurance rate and loss cost recommendations for these states. For more information on NCCI, as well as our recommendations for discussing your Workers' Comp. classification with your state(s) of operation, click here or scroll to the end of this article.
Although Gray says that the state of California has allowed this two-tiered Worker's Compensation structure for power sweeping contractors for some time, that fact was little known and, so, often not utilized. The advantage, Gray says, is that the charge for the classification of 'janitorial' is significantly less than that of 'street sweeping.' Many contractors have reported dismay at having to categorize all of their sweeper operators in the category of 'Street Sweeping' when it comes to Worker's Compensation. The clarification by the California system should be of assistance in working with the Worker's Compensation system in other states. "With regard to the classification for street sweeping service companies," said Gray, "we are adding a statement telling what each of the classifications are doing. The first category, 'Street Sweeping,' applies to cleaning streets or highways by street sweeping or snow removal. Then several paragraphs that follow that provide direction as to how related Activities may need to be classified. "For example, the next statement is that offstreet sweeping, including but not limited to sweeping parking lots or private driveways, shall be classified as 9008, 'Janitorial Services.' Those operations could easily be confused with street sweeping, especially if they used similar equipment. That is the reason for having this statement is to provide clarification and to show that 9008 applies to those operations. "These changes are really meant to reflect existing practices and procedures, so it is possible that some of these have not been widely known. That's one of the reasons for this [delineation] is to take all of these existing practices and procedures and, if they are not clearly addressed, or captured in a rule or directive, to have that captured and now be public knowledge." For companies that only do parking lot sweeping, or only do street sweeping, the record-keeping is straightforward. However, Gray said that record-keeping for companies that do both is not all that difficult, either. You don't have to establish a separate legal entity for each of the types of sweeping in order to qualify. "What you need to do," continued Gray, "is to divide payroll between the two classifications. There are rules contained in our uniform statistical reporting plan in how payroll can be divided between classifications. For example, if you had one employee who is engaged in both operations you need timecard records that show the time that they are engaged in each of the activities. If you had separate crews that are engaged in each of these activities it would be fairly easy to designate that the first crew worked on public streets and roads and the second crew only works in parking lots and other private areas. No separate legal entities would be needed or required in order to do that. When asked about how this might affect insurance premiums, which should be less if the workers are able to be classified under two different categories in regard to coverage, Gray continued on in that vein: "One of the reasons that we make these proposals is to provide clear directives to the insurance companies with the goal that any of the statistical data that they are then going to report to our organization is then going to be reliable, and that they are going to be classified according to these directions." The directives outlined were made final at a meeting on March 14 but will not take effect until approved by the California state insurance commissioner's office. However, keep in mind that this separation between street sweeping and parking lot sweeping in terms of classification are already in place. The only change is to separate them out in the directive language to make it more clear that there is a difference in category available for each of the activities. If approved, which Gray said is expected to happen, the language would take effect on January 1st of 2018. The information provided by Brian Gray was taken from an audio podcast conducted with him on this topic. If you would like to access the original podcast you may do so from this link (opens into a new browser window). You may reach Brian Gray via email sent to bgray@wcirb.com or by calling 415.778.7177.
The NCCI representative I spoke with said that NCCI does not make a distinction in classifications between street sweeping on roads and highways in traffic, and parking lot sweeping on private property with no traffic. I was told NCCI does not differentiate: all power sweeping activities are classified "9402 street cleaning and drivers." On behalf of the power sweeping industry, I have provided the NCCI Regulatory Department with a link to this article, along with an overview of the situation and a request for NCCI to modify to split the power sweeping categories into street sweeping and parking area sweeping. This request included investigating any difference in Workers' Comp. claims between parking area sweeping and street sweeping. We will keep our readers posted on the outcome of that request. In the meantime, here is an easy way for you to determine if your state is affiliated with NCCI, or is one of the 15 states that are not. NCCI's website offers an alphabetical listing by state. If your state does not take direction from NCCI and your parking lot sweeping operation is currently classified under the much more expensive category of 'street sweeping,' I suggest you provide this article to your Workers' Comp. insurance agent along with a request to investigate your options. If you have questions or comments about this article, please be sure to let us know.
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Brian Gray is the Director of Classification Research for the Workers' Compensation Insurance Rating Bureau of California (WCIRB). His organization has changed classifications contained in the California Workers' Compensation Uniform Statistical Reporting Plan-1995 (USRP) that applies to employers in the power sweeping industry. These changes are consistent with established classification procedure and do not reflect any change to the application of the classifications. The report itself may be accessed via 
The National Council on Compensation Insurance (NCCI) provides either guidance or a mandate on rates and Workers' Comp. classifications to 35 U.S. states. I spoke with a representative of NCCI about:
