Flash Report: 🚨Compline to provide 2020 X-Mods Daily – Plus Lower Rating Thresholds, Classification Changes & More

Beginning today as the Bureau promulgates the 2020 X-Mods Compline will be releasing them daily. Through a special arrangement with the Bureau, daily updates will last for at least one week. Compline has already updated all its various systems for calculating X-Mods and other affected functions.

What was adopted is lower thresholds that qualify an employer for experience rating, or trigger a physical audit. The dual wage thresholds for over a dozen construction classes have been modified. There are changes to various classifications. The rate decision is still pending regulatory hearings and approval.

The approved changes, which take effect Jan. 1, 2020, include a controversial interpretation of the new 8010 classification covering plumbing, hardware and electrical supply stores (for past coverage see Rating Bureau…).

The approval also provides revised expected loss rates for each classification.

Included in the adopted changes are the new hardware, plumbing and electrical supplies class 8010. The class was formed from operations that were previously in class 8111 and class 8017 that was eliminated.

The controversy surrounds the impact the change will have on plumbing supply dealers that perform plastic pipe fusion as part of the delivery to a job site – in particular the effect on P&F Distributors. The Bureau contends that the job site fusion operations are not compatible with either the former 8111 class or the new 8010 class and must be separately classified under a construction classification.

Previously, the Bureau settled a dispute with the employer by amending an inspection report and keeping these operations under the 8111 classification. It does not plan to do so now with the new classification, and it has the backing of the Department.

“Any prior misclassification of fusion operations and the resulting appeal to the Administrative Hearing Bureau as to P&F specifically are not within the scope of this rulemaking,” wrote CDI attorney Patricia Hein in the decision. “The proposed amendments are reasonable and consistent with the purpose of the [Uniform Statistical Reporting Plan], which requires that California’s classification system be uniform and tailored to address operations without regard to specific employers to avoid inconsistency between employers with like operations.

New Thresholds

The adopted changes will also usher in higher thresholds for separating the high- and low-wage classes in 14 different construction classification. The increases range from $1 to $3 per hour (see chart below).

The adopted regulations also set new, lower thresholds for determining eligibility for experience rating and when a carrier needs to perform a physical audit of an employer’s payroll records. The limits are lower in response to the dropping rate environment in California in the post-SB 863 Baker workers’ comp reform environment and the lower expected loss rates.

The threshold for requiring a physical audit of employers’ payroll is dropping from $13,000 of final premium to $10,500. Likewise, the threshold for experience rating eligibility is dropping to $9,700 from $10,000.

The eligibility rating threshold is the amount of payroll developed during the experience period in each classification multiplied by the expected loss rates for each class. If the total for all assigned classes is at or above the threshold, then the employer is eligible for an X-Mod.

Class CodeClass Description2019 Threshold2020 ThresholdDifference
5185/5186Automatic Sprinkler Installation27292
5201/5205Concrete/Cement Work25283
5446/5447Wallboard Application34362
5484/5485Plastering/Stucco Work29323
5632/5633Steel Framing32353
6218/6220Excavation/Grading/Land Leveling31343
6307/6308Sewer Construction31343
6315/6316Water/Gas Main Construction31343