Highlights of Noteworthy Decisions

Decision 1859 19
E. Kosmidis
  • Class of employer (associated employers)
  • Class of employer (road construction)
  • Interest (employer assessment)

The employer was a construction firm that employs from 180 to 300 employees. Following a Board audit, Rate Group 764, Land Developers was added effective January 1, 2014. The audit also re-allocated some of the earnings that had been reported in Rate Group 711-02, Highways, Streets and Small Bridges to Rate Group 732-03, Large Bridge Construction.

On appeal the employer requested that the addition of the rating for Land Developers be removed and replaced by the Highway Street and Bridges rate group. The employer also requested the reversal of the classification of insurable earnings under Rate Group 732 for Large Bridge Construction which includes Rate Group 732-03, Classification Unit (CU) 4122-000 Waterworks and Sewage Systems for 2012, 2013 and 2014 and that the insurable earnings be re-allocated to rate group for Highway Street and Bridges; or in the alternative that this be considered a classification change and therefore be effective as of 2014, the year of the audit, or in the alternative effective 2015, the date of the audit letter to the employer. The employer also requested reversal of debit interest for 2012, 2013 and 2014 resulting from the increased premiums that the Board credit the employer with interest on its payments.
With respect to the issue of the classification under the Land Developers rate group, the Vice-Chair found that the only work that the employer performed involved road construction and paving. Incidental to this work, the employer may have had to chop down some trees but the predominant business activity was road construction. Yet Board policy provides that when two employers are associated and one engages in an operation normally considered to be ancillary to the business activity of the other, then both operations are classified in the CU pertaining to that business activity. Employers are classified by the Board considering the contract as a whole in determining the overall business activity. Therefore, as the developer company was an associated employer, the Land Developer rate group was correctly added onto the employer's account effective January 1, 2014. The appeal on this issue was denied.
With respect to the issue of the employer's classification under the rate group for Large Bridge Construction, the Vice-Chair found that for some of the contracts the employer had in 2012, 2013, and 2014 bridge building or paving activity was integral to the employer's main activity of road construction. For these contracts, the classification under rate group 732 should have been reversed and re-allocated to the employer's previous classification. The appeal on this issue with respect to the other contracts in 2012, 2013 and 2014 were denied. As for the other contracts where the rate group for Large Bridge Construction was upheld, this in effect resulted in a classification change and as such should be effective as of January 2014 which was the year of the audit.
The employer's appeal of this issue with respect to the reversal of debit interest and any credit interest for 2012, 2013 and 2014 was also allowed. Board policy provides that the Board shall pay credit interest where a retroactive adjustment is made to premiums that result in a credit difference.
The appeal was allowed in part.