Abstract
The four exceptions to the governing classification rules are crucial for a successful business operation. Hence, the rejection of these exceptions may lead to numerous negative consequences and cause a considerable number of obstacles to the business owner. The paper proves the importance of the Standard Exception classifications, the Interchange of Labor rules, the General Exclusion classes, and the Multiple Enterprise rule for the active organization’s operation.
Introduction
The governing classification rules are the set of guidelines that identify the payroll of the employer to the entire company. However, there are four exceptions to the governing classification rules that play a crucial role in meeting the working standards requirements. A large organization located in Texas faces an obstacle of rejecting the four exceptions to the governing classification and single enterprise rule in Texas. The purpose of this paper is to defend the significance of the Standard Exception classifications, the Interchange of Labor rules, the General Exclusion classes, and the use of the Multiple Enterprise rule for the company.
Main body
The rejection of the Standard Exception classifications is the first critical issue the company is supposed to deal with. Basically, according to the Standard Exception rule, the workers whose duties do not fit the company’s operating activities are viewed as exceptions to the governing classification guidelines. The tasks performed by these employees are considered common; however, they do not focus on the major area of business. The main requirement for receiving the right to implement the Standard Exception classification is to separate the workers, whose duties do not focus on the key operating activities of a business, from the operating hazards. The given company includes seven different manufacturing sites and two administrative buildings. The key distinctive feature of the company is the geographical separation of administrative buildings from the plants. Therefore, the employees who work in the administrative buildings have a right to receive that payroll based on the Standard Exception classifications. Hence, the rejection of this exception to the governing classification rules will negatively influence the organization’s working standards.
Besides the Standard Exception classifications, the Interchange of Labor rules dismissal will also have a destructive effect on the company. Generally, the Interchange of Labor rule provides an opportunity to split the payroll for the works among the several class codes that may occur within the operations. According to Buchmueller and Valletta (2017), “the link between work and health is particularly significant in the United States, given the central role that employers play in financing health care” (p. 218). With the application of the Standard Exception classifications, the employer pays the fee calculated on the worker’s actual predisposition to be injured. In contrast, without the Interchange of Labor rule, the employer is charged at the highest possible rate, so a considerable part of the company’s operational funds is used to cover the insurance expenses.
The given organization provides a workplace for more than 8000 employees of various statuses and positions. Since different workers complete separate operation activities, they have diverse levels of exposure to injury. Hence, to manage the budget flow wisely and effectively, the business owner implements the Interchange of Labor rule. As a result, the company’s EMR (Experience Modification Rate) for the trailing 36-month period is 0.94. According to Al-Bayati et al. (2020), the average EMR for an organization is approximately one. Thus, with the implementation of the Interchange of Labor rule, the company’s EMR fits the average norm. However, once the exception is rejected, the employer will be forced to spend a bigger part of the operational expenses to cover the insurance fees.
The third exception to the governing classification that significantly contributes to the company’s prosperity is the General Exclusion classes. Basically, the General Exclusion clauses are opposite to the Standard Exception classifications. Therefore, the General Exclusion classes are considered completely uncommon for a specific business’s operational activity and require a separate payroll from the employer. Being a huge enterprise with 8000 employees and gross revenue of $1.3 billion, the company has a wide diversity of workers performing common and uncommon tasks for the operational activity of a business. Consequently, the General Exclusion rule is extremely significant to the organization, and its rejection will not let the business owner fit the working standards.
The last aspect that would negatively influence the organization is the rejection of the Multiple Enterprise rule. This regulation allows separating the payroll into multiple classifications in case if the firm conducts any additional activities that do not correspond to the primary business operation. Therefore, the Multiple Enterprise rule contributes to the given company to a great extent because it helps to satisfy every worker’s needs, regardless of their position, status, and field of operation. The Multiple Enterprise rule is beneficial for insured employers who have multiple entities. Employing payroll segregation, business owners have an opportunity to manage the funds effectively and avoid financial crashes.
Conclusion
Overall, the four exceptions to the governing classification are an essential part of every business. They allow the employers to correspond to the working standards and provide an opportunity for sufficient funds flow management. The rejection of the Standard Exception classifications, the Interchange of Labor rules, the General Exclusion classes, and the Multiple Enterprise rule would have an extremely detrimental effect on the company. Thus, the workers’ compensation board is supposed to prevent eliminating the exceptions to the governing classification.
References
Al-Bayati, A. J., O’Barr, K., Suk, S., Albert, A., & Chappell, J. (2020). Experience modification rate as a prequalification criterion for safety performance. Professional Safety, 65(07), 31-38.
Buchmueller, T. C., & Valletta, R. G. (2017). Work, health, and insurance: A shifting landscape for employers and workers alike. Health Affairs, 36(2), 214-221.