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Prepare Your Business for Dual Wage Increases

by FCIS Team | This article was posted on 08 31, 2022 |

If you are a California contractor, your payroll may be increasing in the coming months due to changes from the Workers’ Compensation Insurance Rating Bureau. The impending dual wage increases will significantly impact construction clients in these class codes.

Let's play out this hypothetical scenario (reference the chart below):

Construction Dual Wage Threshold Changes chart

You have 75 workers in class codes 5403/5432. The dual wage for this code is increasing from $35 to $39.
When the client renews after Sept. 1, 2022, in order to qualify for the lower workers’ compensation rate for higher threshold employees, they must increase wages for all employees in class code 5432 to keep them in the high wage class code. If the wages do not equal or exceed the new threshold amounts, the payroll will be reclassified into the lower wage classification, resulting in potential significant increases in premium at the time of audit.

In accordance with WCIRB guidelines, auditors routinely review time cards to ensure clients meet the “wage test” for dual wage codes. Failure to maintain time cards can result in costly audits as regulations allow for payroll to be automatically rated in the highest rated code. As a reminder, California Labor Code requires you to keep records and copies of all employees’ time cards, including times they clock in and out for lunch or breaks.


Versions of the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP), California Workers’ Compensation Experience Rating Plan—1995 (ERP) and Miscellaneous Regulations for the Recording and Reporting of Data—1995(Miscellaneous Regulations), along with the advisory California Basic Underwriting Manual, are now available.