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Author Topic: Classification of miscellaneous employees working for farm AND non-farm codes.  (Read 7108 times)
 
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The valetudinarian
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« on: June 23, 2008, 08:46:54 PM »

As an example, let us assume that an audit on a farm produced the following classifications and payroll:




Code 7219-Truckmen - $65,019.00
Code 0050-Farm Machinery Operation–by contractors - $13,016.00
Code 0044-Cotton Farms - $59,294.00
Code 0041-Potato Crops - $9,952.00

This insured farms cotton and potatoes and also hauls farm products on a fee basis for other farmers during slow work periods. They also harvest crops grown by neighbors on a fee basis. This is accomplished using the insured’s farm machinery such as combines.
 
A repair shed is maintained for the repair and maintenance of the insureds farm machinery.

It is well known that the payroll of miscellaneous employees on a farm shall be assigned to the various crop classifications in the same proportion as the allocated crop payroll bears to the total allocated payroll. In other words, allocated.

We have a problem here. We have two farm codes and two non-farm codes which would require the payroll of miscellaneous employees to be assigned to the governing class. We have two separate rules to contend with.
 
The proper thing to do is to determine which rule to follow. How?

It is important to note here that it is never a situation of total non-farm vs. total farm payroll.
The payroll would be assigned as follows:

 If 7219 governs over 0050 and the total farm payroll (separately), the miscellaneous payroll would be assigned to 7219.

If 0050 governs over 7219 and the total farm payroll (separately), the miscellaneous payroll would be assigned to 0050.

In our example above, the total farm payroll governs so this payroll should be allocated among the farm classifications. Wink
 
This example assumes that the shop payroll is incidental to farm and non-farm classifications.
Hope this helps.



« Last Edit: August 06, 2009, 05:33:09 PM by auditor1 » Logged
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« Reply #1 on: June 23, 2008, 11:42:06 PM »

Good one Val - very interesting!

So, the first step is to compare the governing non-farm code to the total farm payroll.  Then, whichever develops the highest payroll between the governing non-farm code and the total farm payroll, follow either the General Classification Procedure in Part 3, Section III, Rule 5, General Inclusions, or the Special Industry Procedure for Farms in Part 3, Section IV, Rule 3c(5), Miscellaneous Employees (Farms).

This raises two questions for me:

  • If the insured has physically separate crews conducting repair and maintenance for the trucking operation and for the farm machinery equipment operation without interchange, 7219 would apply for the repair of trucks versus 0050 or 0044 &/or 0041 for the repair of farm machinery - wouldn't that be correct?

  • Aside from farms, are there similar complications in assigning General Inclusions/Miscellaneous Employees when dealing with an insured that conducts, say 7219 Trucking, and any of the other Special Industry classifications?

Construction has a Miscellaneous Employee Rule; Mining has Surface Employee and Shop employee rules; Stores has no reference to Miscellaneous Employees (Wrecking doesn't either, but directs 7219 for subcontract crane operations and debris hauling).  My second question is more theoretical I suppose - I don't know how likely it would be for such a situation to exist.
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« Reply #2 on: June 24, 2008, 10:08:24 AM »

Excellent reply! I completely concur.
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The valetudinarian
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« Reply #3 on: June 24, 2008, 01:31:44 PM »

This raises two questions for me:

    * If the insured has physically separate crews conducting repair and maintenance for the trucking operation and for the farm machinery equipment operation without interchange, 7219 would apply for the repair of trucks versus 0050 or 0044 &/or 0041 for the repair of farm machinery - wouldn't that be correct?


Answer: If the trucks are not used in his own operation. ditto machinery,you could have separate crews working on each and 7219 and allocation of payroll would be the appropriate methods. I don' think he is going to say "Gee I can't use these assets in all my endeavors because my Comp rates might go up".He could, however segregate this payroll by time card or allocation, whichever turns out to be the correct method


    * Aside from farms, are there similar complications in assigning General Inclusions/Miscellaneous Employees when dealing with an insured that conducts, say 7219 Trucking, and any of the other Special Industry classifications?

None that I know of but I am new.
« Last Edit: June 24, 2008, 01:45:39 PM by The valetudinarian » Logged
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