RULE IX – SPECIAL CONDITIONS OR OPERATIONS AFFECTING COVERAGE

1. Definition
   Executive Officers of a corporation are the President, Vice President, Secretary, Treasurer or any other officer appointed or elected in accordance with the charter or by-laws of a corporation.
2. Law And Status
   Executive Officers of a corporation are covered under the Pennsylvania Workers’ Compensation Law and have the same status as employees under the policy.Exceptions
   (1)  Elected officers of Pennsylvania or its political subdivisions are not considered employees; therefore, they are not covered by the policy.
   (2) An executive officer of a for-profit corporation or an executive officer of a nonprofit corporation who serves voluntarily and without remuneration may elect not to be an “employee” of the corporation. For the purposes of this exclusion, an executive officer of a for-profit corporation is an individual who has either an ownership interest in a Subchapter S corporation as defined by the Act of March 4, 1971 (P.L. 6, No. 2), known as the “Tax Reform Code of 1971, ” or an interest of at least five percent in a Subchapter C corporation as defined by the Tax Reform Code of 1971.
3. Executive Officer Exclusion Procedure
   a. An employer who wishes to exempt an executive officer(s) from coverage under their workers compensation policy may obtain the forms listed below from either the Commonwealth of Pennsylvania, Department of Labor & Industry – Bureau of Workers’ Compensation, 1171South Cameron Street, Room 103, Harrisburg, Pennsylvania 17104-2501 or their insurance carrier, agent or broker.Application for Executive Officer Exception from the Provisions of the Pennsylvania Workers’ Compensation Act: Section 104 LIBC – 509 REV 04-18.Executive Officer’s Affidavit LIBC – 513 REV 04-18(Note: Copies of the above forms are found in Section 3 of this Manual)b. The employer must return both completed forms to their insurance company prior to the exclusion date. The carrier will endorse their policy by attaching an Exclusion of Executive Officers Endorsement – Pennsylvania (W C 37 03 10 C). As a general rule, executive officers may be excluded only on the effective date of the policy. Any exceptions to this general rule must be approved in writing by the carrier issuing the policy.c. This Executive Officer Exclusion Procedure must be repeated each time a policyholder wishes to change the status of any executive officer or secures coverage from a different carrier group.d. Subchapter C and S corporations with no employees must contact the Bureau of Workers Compensation, 1171 South Cameron Street, Room 103, Harrisburg, Pennsylvania 17104-2501for Executive Officer Exemption Certificates. (717 783 5421)(Note: Carrier group is defined as an insurance carrier sharing the same controlling ownership.)

    

4.  Executive Officers – MULTIPLE CORPORATE ENTERPRISES
   An executive officer may either receive a salary from only one or from several corporations insured undergone policy. In other instances, several policies may be   issued to cover several corporations, and an executive officer may receive a salary from each of these corporations. The following procedure shall apply in these instances:Where it is permissible to include more than one corporation on a single policy and such corporations are insured by a single carrier whether under one or more   policies, the several corporations shall be considered as a unit with respect to the application of the Executive Officers Rule. In all other cases the rule shall apply on a policy basis.
   
   
5. Executive Officers – REMUNERATION – TREATMENT OF:
   a. The remuneration of an executive officer shall not be included with the payroll of the employer for premium computation purposes, provided:1.  The executive officer is elected for the value of his or her name or because of stockholdings, has no duties and does not come on the premises, except perhaps to attend directors’ meetings.2.  The executive officer ceases to perform any duties and does not come on the premises, except perhaps to attend directors’ meetings.b.   The remuneration of an executive officer shall be included with the payroll of the employer for premium computation purposes, subject to the minimum and maximum provisions of the Basic Manual, provided1.  The executive officer ceases to perform any duties but frequently visits the premises of the employer.2. The executive officer frequently visits the premises of the employer for business conferences, directors’ meetings or similar duties, even if the officer is an employee or officer of another employer in the operations of which he/she takes an active interest.3. The officer receives no salary; however, a regular salary is credited to him or her on the books. In this instance the amount credited must be included in payroll.4. The officer receives no salary or the audit records fail to disclose the salary. In this instance the amount to be included in the payroll is the applicable corporate officer minimum.
6. Premium Determination
   Premium for executive officers, other than elected officers of Pennsylvania or its political subdivisions, shall be based on their total payroll, subject to the following: (For further information refer to Section 1, Rule IX.)
   a. The requirements of Rule V-E.
   b. The minimum individual payroll for an executive officer is $1,325 per week.
   c. The maximum individual payroll for an executive officer is $5,300 per week.
   d. These limitations apply to the weekly payroll of each executive officer for the number of weeks the officer was employed during the policy period.
   e. A part of a week shall be considered a full week in determining the weekly payroll.
7. Assignment of Payroll
   Payroll assignment shall be made in the same manner as for any employee. No executive officer’s payroll may be assigned to the standard exception classification unless that officer’s duties fulfill the criteria of assignment to one of the following classifications: Code 951, Salesperson – Outside, or Code 953, Clerical Office Employees or Code 822, Telecommuting Clerical Employees. See Rule IV.
   
   
8. Flight Duties
   Payroll of an executive officer who is a pilot or member of the flying crew of an aircraft used in the insured’s business shall be assigned as follows:
   a.  For each week during which the executive officer did not perform flight duties, assign the officer’s payroll as provided in Rule IX-A-4.b.  For each week during which the executive officer performed flight duties, assign the officer’s payroll for that week to Code 7421. If an executive officer’s non-flying duties in such a week are subject to a higher-valued classification, that insuring carrier’s higher-valued classification shall be assigned in that week.

   Rules 5a and b apply on the basis of the pilot’s log book required under Federal regulations or other verifiable records.If Code 7421 applies and verifiable records are not maintained to indicate those weeks during which flying is performed by executive officers, their payroll shall be assigned to the insuring carrier’s highest-valued classification which applies to any of their operations.

9. Professional Employer Organization (PEO) – Corporate Clients
   The full remuneration of an executive officer(s) shall be included in the payroll of the PEO without payroll limitation. Executive officers may elect to not be subject to the Pennsylvania Workers Compensation Act. Refer to Rule 2. – Law and Status of this section for officer exclusion procedure. The corporate entity may also obtain a separate policy of insurance for their officer(s) and/or any employees not insured by the PEO contract agreement.
10. Executive Officers of Unincorporated Associations
    Executive officers of an unincorporated association are the President, Vice President, Secretary, Treasurer or any other officer appointed or elected in accordance with the charter or by-laws of an unincorporated association. Executive Officers of an unincorporated association may not elect to be excluded under the law. Premium for an executive officer of an unincorporated association shall be based on their total payroll, subject to the minimum and maximums established for corporate executive officers.

Any person who is a licensed real estate salesperson or an associate real estate broker, affiliated with licensed real estate broker or a licensed insurance agent affiliated with a licensed insurance agency, underwritten agreement, remunerated on a commission only basis and who qualifies as an independent contractor for state tax purposes or for federal tax purposes under the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 ET seq.) is exempt from coverage under the Workers’ Compensation Act.

1. Employees who qualify for payroll limitations include all players on the employer’s salary list whether regularly played or not, coaches, managers or sports officials.
2. The entire remuneration of each player, coach, manager or sports official should be included in computing premium, subject to a maximum of $280,000 per policy year
3. When a player, coach or manager works for two or more teams in the same sport during the policy year, the maximum shall be prorated.
4. The remuneration of an individual player, coach, manager or sports official is subject to a minimum of$500 per policy year, including board and lodging. For more details refer to the Classification and Rating Values Section.

Sole proprietors, partners and members of a Limited Liability Company (LLC) are not mandatorily covered by the Pennsylvania Workers’ Compensation Act or the Pennsylvania Occupational Disease Act. A sole proprietor, partner or member of a Limited Liability Company (LLC) may be able to purchase and/or be insured under a standard workers compensation insurance policy. When such coverage is provided, attach WC 00 03 10, Sole Proprietors, Partners, Officers and Others Coverage Endorsement, to the policy, naming the individual(s) so insured. Minimum and maximum payrolls on which premium is based for sole proprietors, partners and members of a Limited Liability Company shall be the same as those set forth in Rule IX, A., 6. for executive officers. If payroll information is not available use the statewide average weekly wage in effect as of the inception date of the policy. The SAWW may be obtained, among other sources, from the Pennsylvania Department of Labor and Industry’s website or from the PCRB’s website under the “Quick Reference” table. Profit or loss amounts attributed to the insured individual’s interest in the business are not to be considered payroll.

1. Law on Contractors and Subcontractors
   a. Pennsylvania Workers’ Compensation Act (Section 302 a & b) provides that a contractor is responsible for the payment of compensation benefits to employees of its uninsured subcontractors.
   b. A contractor shall not subcontract all or any part of a contract unless the subcontractor has presented proof of insurance under this act.
   c.  (1) Prior to issuing a building permit to a contractor, a municipality shall require the contractor to present proof of workers’ compensation insurance or an affidavit that the contractor does not employ other individuals and is not required to carry workers’ compensation insurance.
        (2) Every building permit issued by a municipality to a contractor shall clearly set forth the name and workers’ compensation policy and the contractor’s Federal or State Employer Identification Number. This information shall be in addition to any information required by municipal ordinance. If the building permit is issued to an applicant which affirms it is not obligated to maintain workers’ compensation insurance under this act, the permit shall clearly set forth the contractor’s Federal or State Employer Identification Number and the substance of the affirmation and that the applicant is not permitted to employ any individual to perform work pursuant to the building permit.
       (3) Every municipality issuing a building permit shall be named as a workers’ compensation policy certificate holder of a contractor-issued building permit. This certificate shall be filed with the municipality’s copy of the building permit. An insurer issuing a policy which names a municipality as a workers’ compensation policy certificate holder pursuant to this section shall be required to notify that municipality of the expiration or cancellation of any such                        policy of insurance or policy certificate within three working days of such cancellation or expiration.
   (4) A municipality shall issue a stop-work order to a contractor who is performing work pursuant to a building permit, upon receiving actual notice that the contractor’s workers’ compensation insurance or State- approved self-insured status has been cancelled. Also, if the municipality receives actual notice that a permittee, having filed an affidavit of exemption from workers’ compensation insurance, has hired persons to perform work pursuant to a building permit      and does not maintain required workers’ compensation insurance, the municipality shall issue a stop-work order. This order shall remain in effect until proper workers’ compensation coverage is obtained for all work performed pursuant to the building permit.d.  (1) Where a contractor is performing work for a public body or political subdivision, all contractors and subcontractors shall provide proof of workers’ compensation insurance to the public body or political subdivision effective for the duration of the work.(2) The public body or political subdivision shall issue a stop work order to any contractor who is performing work for that public body or political subdivision upon receiving notice that any public contractor’s workers’ compensation insurance, or State-approved self-insurance status, has expired or has been cancelled. If the public body or political subdivision receives actual notice that a contractor, having filed an affidavit of exemption from workers’                            compensation insurance, has hired persons to perform work for a public body or political subdivision and does not maintain the required workers’ compensation insurance or self- insurance, the public body or political subdivision shall issue a stop work order, which order shall remain in effect until proper workers’ compensation coverage is obtained for all work performed pursuant to the contract of work for the public body or political subdivision.

   e. Should such policy of workers’ compensation insurance be cancelled or expire during the duration of the work or should the workers’ compensation self-insurance status change during the said period, the contractor shall immediately notify, in writing, the municipality, public body or political subdivision of such cancellation, expiration or change in status.

   f. Nothing in this act shall be the basis of any liability on part of the municipality.

   g. For purposes of subsections (b), (c) and (d) of this section, “proof of insurance” shall include a certificate of insurance or self-insurance, demonstrating current coverage and compliance with the requirements of this act, the Occupational Disease Act and the Longshore and Harbor Workers’ Compensation Act (44 Stat. 1424, 33 U.S.C. 901 et seq.), its amendments and supplements, where applicable.

   h. For purposes of subsections (b), (c) and (d) of this section, “proof of insurance” shall not be required when the employer has been exempted pursuant to section 304.2 of this act.

2. Coverage If the contractor has specifically assumed this liability, use the Statutory Employer Endorsement (WC 37 0309) in Section 3 of this Manual. The carrier for the subcontractor should use Exclusion of Employees Endorsement (WC 37 03 03) in Section 3 of this Manual.
3. Premium for Uninsured Subcontractors
   The contractor shall furnish satisfactory evidence that the subcontractor had workers’ compensation insurance in force covering the work performed for the contractor. For each subcontractor for which such evidence is not furnished, additional premium shall be charged on the policy which insured the contractor as follows:a. The contractor shall provide a complete payroll record of the employees of each uninsured subcontractor. Premium on such payroll shall be based on the classifications which would have applied if the employees of the subcontractor had been employees of the contractor.
   b. If the contractor does not supply the payroll records of its subcontractor, the full subcontract price of the work performed during the policy period by the  subcontractor shall be established as the payroll of the subcontractor’s employees. The additional premium shall be charged on that amount as payroll.Exception 3b
   If investigation on a specific job discloses that a definite amount of the subcontract price represents payroll, such amount shall be the payroll for the additional premium computation. In contracts for: (1) mobile equipment with operators (such as but not limited to: earth movers, graders, bulldozers, or log skidders), the payroll shall not be less than 33% of the subcontract price, (2) labor and material, the payroll shall not be less than 50% of the subcontract          price, (3)labor only, the payroll shall be established as not less than 90% of the subcontract price.c.    If an experience modification has been established for the contractor, such experience modification shall be applied to the premium developed for the uninsured subcontractor.
4. Drivers, Chauffeurs and Helpers Under Contract
   This rule on subcontractors does not apply to contracts to drivers, chauffeurs or helpers on vehicles engaged under contract. See Rule IV B. 3a (10).

Ex-medical coverage is prohibited in the state of Pennsylvania.

The payroll of a trucker shall be assigned to a state in which it has a terminal or base of operations. These guidelines are not applicable to dispatching or broker operations.

Example:

A driver/employee resides in State A. His employer/trucker base of operations is in State B. If the driver/employee regularly travels to the terminal or base of operations in State B to load or unload freight or perform other regular work functions, i.e. mechanic, the driver/employee payroll shall be assigned to State B.

When the trucker does not operate from a terminal or base of operation, the state to which the payroll is assigned shall be determined in accordance with the following procedures.

If it can be established that the trucker does a significant portion of its business in a single state, the payrolls, other than those payrolls which can be attributed to specific work functions in a specific state, should be assigned to that state. Factors such as driving time, number of pickups and deliveries, revenue and tonnage, should be considered in determining the state of payroll assignment. If a state payroll assignment cannot be made based on these factors, then the truckers payroll shall be assigned tohis state of residence.

For the purposes of the guidelines the following definitions shall apply:

TRUCKER – A trucker is the holder of operating authority from a government agency.

TERMINAL OR BASE OF OPERATIONS – A permanent location owned, leased or used by the trucker at which loading, unloading and other related non-clerical work functions such as maintenance and transfers are performed and from which the driver/employee is assigned to work from on a regular basis.

STATE OF RESIDENCE – The state in which the trucker resides as evidenced by the location used for the filing of federal income taxes.

REGULAR – A pattern of 40 hours per week or any other pattern that appears on a continuing basis.

1. Program Description
   The Pennsylvania Construction Classification Premium Adjustment Program (PCCPAP) provides for a premium credit for up to one year for a policy which contains one or more construction classifications.

   For policies subject both to a Pennsylvania Construction Classification Premium Adjustment Program credit and any retrospective rating plan the PCCPAP credit shall be applied in determining standard premium. Such adjusted standard premium shall then be used wherever standard premium would otherwise apply in determining retrospective rating plan values and amounts for the retrospective rating plan applicable to the same risk if no PCCPAP credit were applicable. PCCPAP credits shall not be applied to final retrospective premium either in lieu of or in addition to the above prescribed procedure.

   The basis for determining the credit is the total payroll (including overtime premium pay) and hours worked for each construction classification as reported to taxing authorities. The applicable report periods vary according to the policy effective date of each policy, as set forth below:
   Policy Effective Dates                               Reporting Period Qualifying Wages 
   October 1, 2024 and later                                 Third calendar quarter of 2023

   If the insured did not engage in operations for the complete quarter, then the last complete quarter prior to policy year inception shall be used or, if there was no complete quarter of operations prior to the policy inception, then the first complete quarter after policy inception shall be used. A credit maybe determined for each construction classification by dividing the total payroll, including overtime premium pay, by the number of hours worked to arrive at the average hourly wage for the classification. In the absence of specific records for salaried employees, it will be assumed each such individual worked forty (40) hours per week. The credit for average hourly wage is listed below:

   PCCPAP Wage Table 
   Policy Effective Dates – October 1, 2024 and later

   Average Hourly Wage	Credit From Standard Premium	Average Hourly Wage	Credit From Standard Premium
   39.49 or less	None	48.70     49.54	18%
   40.10     40.74	6%	49.55     50.39	19%
   40.75     41.39	7%	50.40     51.29	20%
   41.40     42.04	8%	51.30      52.19	21%
   42.05     42.69	9%	52.20     53.14	22%
   42.70     43.39	10%	53.15     54.09	23%
   43.40     44.09	11%	54.10     55.09	24%
   44.10     44.79	12%	55.10     56.09	25%
   44.80     45.54	13%	56.10     57.14	26%
   45.55     46.29	14%	57.15     58.19	27%
   46.30     47.09	15%	58.20     59.29	28%
   47.10     47.89	16%	59.30     60.44	29%
   47.90     48.69	17%	60.45 and over	30%

   The total construction classification credit amount, in dollars, must be calculated and then divided by the total policy premium at PCRB rating values – including construction and non-construction classifications. The resulting percentage credit will be the indicated policy credit. When calculating the indicated policy credit, the percentage shall be rounded to the nearest whole number with .5 being rounded upward (as an example, 5.4 rounded to 5 and 5.5 rounded to 6).

   The indicated policy credit will be applied to the policy for any insured not eligible for experience rating. For insureds eligible for experience rating, a policy credit is determined as follows:

   *  The insured’s experience modification effective one year prior to the effective date of the Pennsylvania Construction Classification Premium Adjustment Program (PCCPAP) credit will be determined in accordance with applicable Manual rules using expected        losses reduced by the indicated policy credit percentage for the policy period to which the PCCPAP credit will apply. This experience modification will be designated as the PCCPAP numerator.

   *  The insured’s experience modification effective one year prior to the effective date of the PCCPAP credit will be determined in accordance with applicable Manual rules. This experience modification will be designated as the PCCPAP denominator.

   *  A credit Adjustment Factor will be computed by dividing the PCCPAP numerator by the PCCPAP denominator. This credit adjustment factor will be rounded to four decimal places. In the event that the insured’s experience modification factor effective one year prior to the effective date of the PCCPAP credit cannot be promulgated at the time the PCCPAP credit is determined, the credit adjustment factor will be set equal to 1.0000.

   *  A policy credit will be computed according to the following formula: 100 – [100 – indicated policy credit] x credit adjustment factor.

   *  A policy credit will be computed according to the following formula: 100 – [100 – indicated policy credit] x credit adjustment factor.

   EXAMPLE:

   Hypothetical insured qualified for experience rating –

   1	Insured’s indicated policy credit:	26
   2	PCCPAP numerator: (insured’s experience modification for prior policy period with expected losses reduced by the indicated policy credit)	1.026
   3	PCCPAP denominator: (insured’s experience modification for prior policy period)	0.957
   4	Credit adjustment factor:((2) / (3)) rounded to 4 decimals	1.0721
   5	Policy credit factor:100 – [100 – 26] x 1.0721 rounded to two decimals	21

   The insured shall submit the required payroll and hours worked information to the Pennsylvania Compensation Rating Bureau for calculation of any applicable credit. The carrier shall, upon audit, verify the information that was submitted by the insured and used in the calculation of the credit. If the carrier discovers an error in the original request for policy credit, the revised information must be submitted to the Pennsylvania Compensation Rating Bureau for recalculation. If the insured does not furnish records to verify the payrolls and hours worked originally submitted and used in the calculation of the credit, there shall be no credit applied to the policy.

   The credit authorized by the Pennsylvania Compensation Rating Bureau shall appear on Item 4 of the policy. If the credit applicable to the policy is not available at the time of policy issuance, the carrier shall endorse the policy to provide the appropriate credit information once a qualifying application has been processed and the PCRB has notified the carrier of the credit determined on the basis of such application.

   Report Pennsylvania Construction Class Premium Credit on the information page and unit statistical report under Code 9046.

   Carriers are required to use the approved form to notify all their insureds, who have one or more construction classifications on their policy, that they may be eligible for a premium adjustment credit.

   “Construction classifications” are those class codes that are 6xx or 26xx codes, which are direct employment and temporary staffing construction classifications, respectively. For example, direct employment classification code 615 and associated temporary staffing classification code 2615 are both PPCPAP-eligible class codes.

2. Appeals The PCRB’s determination of an individual risk’s eligibility for or the percentage of credit under the Pennsylvania Construction Classification Premium Adjustment Program may be appealed pursuant to RULEXVI, APPEALS FROM APPLICATION OF THE RATING SYSTEM PROCEDURE, Section 1 of this Manual.
   

1. The Pennsylvania Workers’ Compensation Act of June 2, 1915, as amended, mandates that the Department of Labor and Industry develop certification criteria for the operation of safety committees. (For certification criteria contact the Pennsylvania Department of Labor and Industry.)
2. A 5% rate credit shall apply to the policy period beginning with the next policy in effect following certification and shall not apply to the policy period in effect when the certification is issued.
3. The 5% rate credit shall continue if the employer annually submits certification renewal affidavits acceptable to the Department of Labor and Industry.
4. Use Endorsement WC 37 04 04 C Certified Safety Committee Endorsement – Pennsylvania to showcredit on the appropriate policy