report on towing, roadside assistance, and freeway service ... · released: august 19, 209 1 wcirb...

Workers’ Compensation Insurance Rating Bureau of California®

Workers’ Compensation Insurance Rating Bureau of California

Report on Towing, Roadside Assistance, and Freeway Service Patrol

Excerpt from the WCIRB Classification and Rating Committee Minutes July 28, 2009

About this Report The WCIRB prepares and presents reports to the WCIRB’s Classification and Rating

Committee to assist in the formulation of proposed changes to the Insurance Commissioner’s regulations. Once adopted by the Classification and Rating Committee, the recommendations contained in the report are provided to the WCIRB Governing Committee and may be included in a WCIRB regulatory filing that is submitted to the Insurance Commissioner for approval. About the WCIRB The WCIRB is California's trusted, objective provider of actuarially-based information and research, advisory pure premium rates, and educational services integral to a healthy workers' compensation system. Learn more at www.wcirb.com.

2009 Workers’ Compensation Insurance Rating Bureau of California. All rights reserved.

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Released: August 19, 209

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WCIRB Ca l i f o rn ia®

Report on Towing, Roadside Assistance, and Freeway Service Patrol Final Report – July 28, 2009

8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots – no repair – including cashiers

8387, Automobile or Automobile Truck Service Stations – all employees – including accessories and spare parts departments and estimators, service writers, customers service representatives and cashiers – N.O.C.

8389, Automobile or Automobile Truck Repair Shops or Garages – no retail gasoline sales – all employees – including estimators, service writers and customers service representatives – N.O.C.

8393, Automobile or Automobile Truck Body and Fender Repairing and Painting – all employees including estimators, service writers and customer service representatives

8391, Automobile or Automobile Truck Dealers – all employees other than automobile or automobile truck salespersons – including estimators, service writers and accessory or spare parts sales.

7219(1), Trucking Firms – N.O.C. – including terminal employees and mechanics 3821, Automobile or Automobile Truck Dismantling — including the salvaging or junking of

parts and store operations Executive Summary Objective The classification procedure applicable to the automobile or automobile truck towing, roadside assistance and freeway service patrol industry does not have a single classification that specifically describes these towing and roadside assistance operations. Absent a specific classification, the WCIRB has historically treated towing and roadside assistance operations as a general inclusion and has assigned towing and roadside assistance operations to the classification that best describes the operations conducted at the policyholder’s fixed location. In other words, towing and roadside assistance operations have not been treated as a distinct commercial operation, but as an integral and non-severable component of the policyholder’s other operations. This approach, while consistently applied, has prompted several inquiries and complaints from policyholders seeking an alternative classification assignment. This approach has also created the following issues:

1. It does not reflect that the towing and roadside assistance operations have evolved into a distinct commercial industry.

2. Policyholders engaged in similar and often identical towing or roadside assistance operations may be classified differently based on a fixed location operation – even though the fixed location operation is not integral to their towing or roadside assistance services and does not generate the majority of the policyholder’s payroll.

3. The pure premium rates for some classifications may be significantly impacted by the payroll and loss experience of towing and roadside assistance operations. Accordingly, to the extent that towing and roadside assistance is not “normal and usual” to the operations contemplated by a classification, the associated pure premium rates may reflect disparate sets of operations.

In view of the above considerations and the longstanding concerns about the classification procedures applicable to this industry, the WCIRB reviewed the towing and roadside assistance industry to determine the feasibility of establishing a unique classification. Findings Based upon its review of classification procedures applicable to towing, roadside assistance and freeway service patrol, the WCIRB finds the following:


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1. Towing, roadside assistance and freeway service patrol operators represent a distinct and clearly identifiable industry, engaged in a relatively homogenous set of operations that has exposure to hazards that clearly differs from employers assigned to other classifications and is of sufficient size to generate enough data to develop a statistically credible pure premium rate;

2. The towing and roadside assistance industry does not include either: (1) the towing of vehicles that

are owned by the employer or (2) roadside assistance conducted by employers that do not maintain an agreement with a third party such as a motor club or a law enforcement entity;

3. The operations of firms performing towing, roadside assistance and freeway service patrol activities

are more similar to each other than they are to the automobile service or repair classifications to which they are assigned based on the current classification procedure for the industry;

4. Towing and roadside assistance operations do not normally prevail in businesses engaged in automobile service or repair activities;

5. Providing towing and roadside assistance services falls outside the scope of what is normally contemplated by “drivers and their helpers” as contained in the General Inclusions rule; and

6. Establishing a new classification for roadside assistance, towing and freeway service patrol would

allow for: (a) a direct classification assignment based upon the actual operations performed; (b) the pure premium rate to be based on the industry’s own experience; and (c) an equitable administration of classification procedure for this industry.

Recommendation In view of the above, the WCIRB recommends the following:

1. Establish a new classification for automobile or automobile truck towing, roadside assistance and freeway service patrol operations conducted on vehicles not owned by the employer;

2. Amend the footnote to the automobile service and repair classifications to direct that towing,

roadside assistance and freeway service patrol, when conducted on vehicles not owned by the employer, shall be separately classified;

3. Amend Classifications 3821, Automobile or Automobile Truck Dismantling, and 8391, Automobile or Automobile Truck Dealers, to direct that the classification includes the transporting of vehicles owned by the employer; and

4. Add an entry to the USRP’s Rulings and Interpretations Supplement to clarify the classification

procedure applicable to the towing, roadside assistance and freeway service patrol industry and provide examples to illustrate the intended application of the proposed classification.


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Introduction Over the past several years, the WCIRB has received several inquiries, complaints and appeals from policyholders and insurers regarding the classification procedure applicable to automobile towing, roadside assistance, freeway service patrol and similar operations (also referred to as towing and roadside assistance.) Since there is no single classification that specifically describes commercial towing and roadside assistance operations and because the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) defines “drivers and their helpers” as General Inclusions – meaning that they “are included in all classifications,”1 such activities have historically been assigned to the standard classification that best describes the operations conducted at the policyholder’s fixed location. For example, automobile or truck towing conducted by a firm that also operates an automobile impound or storage yard is treated as a general inclusion and is assigned to Classification 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots; while towing, when conducted by a firm that also operates an automobile repair shop, is assigned to Classification 8389, Automobile or Automobile Truck Repair Shops or Garages. These classifications would be assigned even though the towed vehicles are not returned to the insured’s fixed location for either storage or repair work. In other words, irrespective of the extent to which the towing and roadside assistance operations are in support of the policyholder’s fixed location – they have been treated as a general inclusion and, therefore, as an integral and non-severable component of the policyholder’s other operations. This procedure has created the following issues:

1. It does not reflect that the towing and roadside assistance operations have evolved into a distinct commercial industry.

2. Policyholders engaged in similar and often identical towing or roadside assistance operations may

be classified differently based on a fixed location operation even though the fixed location is not integral to their towing or roadside assistance services and does not generate the majority of the insured’s payroll.

3. The pure premium rates for some classifications may be significantly impacted by the payroll and

loss experience of towing and roadside assistance operations. Accordingly, to the extent that towing and roadside assistance is not “normal and usual” to the operations contemplated by a classification, the associated pure premium rates may reflect disparate sets of operations.

In view of the above, WCIRB staff reviewed the towing and roadside assistance industry to determine whether: (1) the industry meets the criteria for the establishment of a unique classification – is it easily identifiable, engaged in a relatively homogenous set of operations and of sufficient size as a group to generate a statistically credible pure premium rate, or (2) the industry’s operations should be viewed in the context of “drivers and their helpers” and be treated as General Inclusions. Description of Operations – Towing and Roadside Assistance To obtain a complete understanding of the operations associated with the towing and roadside assistance industry, WCIRB staff reviewed its library of classification inspection reports and met with representatives of the California Tow Truck Association (CTTA) and the California Division of the American Automobile Association (AAA) to gather additional information. In general, the industry’s operations can be segregated into the following three activities. Automobile or Automobile Truck Towing: Tow operators receive calls from motor clubs, law enforcement entities and individuals. Drivers are dispatched to disabled, abandoned, or illegally parked vehicles. Drivers may also be dispatched to accident sites to remove wrecked vehicles. Drivers operate either tow trucks (also called wreckers, breakdown trucks, or recovery trucks) or flat bad trucks.2 The driver either connects

1 See USRP at Part 3, Standard Classification System, Section 3, General Classification Procedures, Rule 5, General Inclusions. 2 California Vehicle Code Division 6 – Driver’s Licenses, Chapter 1, Article 1, Section 12520 states that to operate a tow truck, a driver must (1) posses a valid California driver’s license for the appropriate class of vehicle to be driven, and (2) either a tow truck driver certificate issued by the California Department of Motor Vehicles or a temporary tow truck driver certificate issued by the California Highway Patrol. Drivers are also required to posses a Class B License to operate vehicles with a Gross Vehicle Weight Rating


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and secures the vehicle to be towed to the tow truck’s towing mechanism or loads it onto the flatbed. The tow truck driver transports the vehicle to either a customer-designated location, a location deemed safe by the California Highway Patrol (CHP) or to a vehicle impound or storage facility. Tow operators that participate in the CHP’s tow rotation listing are required to maintain a vehicle storage facility. Roadside Assistance: Roadside assistance providers contract with third parties including motor clubs and law enforcement entities to dispatch service vehicles to the location of the disabled vehicle. While these firms may also take calls from individuals, the primary source of revenue is from the third party contracts. Roadside assistance services are typically offered 24 hours a day, seven days a week. Drivers are dispatched to the location of the disabled vehicle. Upon arriving at a disabled vehicle, workers attempt to get the vehicle operational by changing tires, jump-starting batteries, supplying a small amount of gasoline and, in some instances, performing minor vehicle repairs such as reattaching ignition wires or battery cables. If a battery needs to be replaced, the technician may sell and install one on the spot. In cases when vehicles cannot be made operational, towing operations are conducted. Although roadside assistance technicians may drive service trucks that are not equipped for towing operations, it is not uncommon to use tow trucks for these operations. As needed, service truck drivers may have a tow truck dispatched. Freeway Service Patrol: Under the California Freeway Service Patrol Program, the CHP contracts with towing and roadside assistance firms to drive during commute hours to tow any stalled vehicles and/or assist stranded motorists by providing services including, but not limited to, supplying one free gallon of gas, jump-starting batteries, changing tires, refilling radiators and unlocking vehicles. By contract, these employees have a specified amount of time to help stranded motorists and get them on their way. If vehicles cannot be repaired or made operational within this time period, employees will tow the stranded vehicle to locations designated safe by the CHP. A defining characteristic common to the towing and roadside assistance operations is that, in most cases, the service provider is not paid by the end user (the vehicle owner), but under contract with a third party – such as the motor club or law enforcement entity. While firms may specialize in one of the above activities, most, if not all, perform both towing and roadside assistance. The CTTA estimates that 80% of industry revenue is from roadside assistance and freeway service patrol operations, whereas only 20% is in actual towing. This is consistent with the industry’s effort to focus more on rendering the disabled vehicle operational rather than towing.3 Fee-based towing and roadside assistance operations are distinct from those conducted by employers that transport their own vehicles. For example, while it is common for automobile dismantlers and automobile dealerships to transport their own vehicles – in that this is not a separate commercial activity – their vehicle transport operations are appropriately treated as a general inclusion and, therefore, as an integral and non-severable component of their other operations. It should also be noted that neither the towing and roadside assistance industry nor the automobile dismantling industry considers emergency road service and vehicle transport to be part of the same industry. Classification Procedure While there is no single standard classification that specifically describes towing, roadside assistance, or freeway service patrol operations, these services are typically provided by firms that also operate some form of automobile service, repair or storage facility. Because the towing and roadside assistance

(GVWR) of more than 26,000 lbs. Tow truck drivers must posses a Class A License to haul a vehicle with a GVWR of more than 10,000 lbs. 3 AAA estimated that 60% of all service calls result in getting a vehicle operational while 40% result in the towing of vehicle. (The disparity between the AAA and the CTTA estimates may be a result of not all service calls resulting in revenue for the service provider. For example, towing of vehicles that have been in an accident, been abandoned or been seized by law enforcement might not be claimed by their owners – resulting in lost revenue for the industry.)


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operations involve driving tow trucks and service trucks, these “drivers and their helpers” are generally treated as General Inclusions. As such, their operations are already “included in all classifications.”4 General Inclusions essentially serve to reinforce the Single Enterprise approach to classification – meaning that all of the operations that normally prevail in the described classification are assigned to that classification.5 While the operations listed as General Inclusions might not all normally prevail within a classification, when they are conducted, they are typically conducted not as a separate commercial enterprise, but in support of the policyholder’s primary business (e.g., a manufacturer or store retains drivers to deliver its product to customers; a paper goods manufacturer uses printing equipment to print logos on its products). Accordingly, in keeping with the single enterprise approach to classification, the WCIRB has historically treated towing and roadside assistance operations as being performed by “drivers and their helpers” and, therefore, as a general inclusion. As a result, the WCIRB has classified the operations of firms engaged in towing and emergency road services in accordance with the operations performed at the firm’s fixed facility. In this sense, the towing operations have not been treated as a separate and distinct enterprise, but as ancillary to the operations conducted at the policyholder’s primary place of business. To do otherwise would necessitate treating the towing and emergency road service operations as a distinct commercial activity meriting a separate classification assignment. Pursuant to the above, the WCIRB has historically assigned towing and roadside assistance operations to one of the following classifications:

AUTOMOBILE OR AUTOMOBILE TRUCK STORAGE GARAGES OR PARKING STATIONS OR LOTS — no repair — including cashiers

8392

Classification 8392 shall not be used for division of payroll in connection with Classifications 8387, Automobile or Automobile Truck Service Stations, or 8389, Automobile or Automobile Truck Repair Shops or Garages, unless the operation described by Classification 8392 constitutes a separate and distinct enterprise having no connection with the operations covered by Classifications 8387 or 8389.

This classification is intended to cover automobile or automobile truck storage garages or parking stations where the operations are restricted to the storing or parking of automobiles or automobile trucks with incidental sale of gasoline or oil or servicing, such as washing, polishing or greasing, but does not apply to an employer engaged in repairing automobiles or automobile trucks. Such employers shall be assigned to the appropriate automobile repairing or servicing classification.

Parking attendants on the payroll of enterprises such as, but not limited to, hotels, restaurants, stores, apartment complexes, commercial or industrial buildings, or theaters that operate parking facilities for their own customers or tenants shall be classified with the enterprise.

Classification 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots, contemplates the operation of storage garages or parking lots for cars and/or trucks. Operations typically include greeting customers who drive their vehicles to a cashier’s booth. The customer may leave their vehicle with an attendant and accept a claim check for their vehicle, after which the attendant parks the vehicle in a designated area within the parking lot. When the customer returns, the attendant retrieves the vehicle, time stamps the claim check, and receives payment for the parking. Some parking lots are operated on a self-park basis wherein the customer parks his or her car and pays the lot attendant upon entering or leaving the parking lot. There are also parking lots that require

4 Other General Inclusions include: commissaries; manufacturing of containers; plant dispensaries; maintenance or ordinary repair of the employer’s buildings or equipment when performed by employees of the employer; printing and lithography; stamping, welding, drilling and blasting; and research laboratories. 5 The USRP at Part 3, Section III, Rule 2, Single Enterprise, provides in part, “[i]f the employer’s business, conducted at one or more locations, consists of a single operation or a number of separate operations that normally prevail in the business described by a single classification, the entire exposure of the business shall be assigned to that single classification. No division of payroll shall be permitted in respect to any other operation, even though such operation may be specifically described by some other classification, unless the applicable classification phraseology or other provisions contained herein specifically provide for such division of payroll.”


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customers to self-pay into a lock-box or via a credit card machine. Parking lot employees monitor these lots on a scheduled basis to ensure all parked vehicles have paid. Towing and Roadside Assistance Operations: Classification 8392 is also assigned to vehicle towing and roadside assistance operations conducted in connection with automobile impound or storage yards. (Tow operators that participate in the CHP’s tow rotation listing are required to maintain a vehicle storage facility.) Firms that operate an impound yard and conduct towing operations typically develop the vast majority of their payroll in the towing operations – retaining only one or two employees to staff the impound yard.

AUTOMOBILE OR AUTOMOBILE TRUCK SERVICE STATIONS — all employees — including

accessories and spare parts departments and estimators, service writers, customer service representatives and cashiers — N.O.C.

8387

Classification 8387 shall not be used for division of payroll in connection with Classifications 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots, or 8388, Rubber Tire Dealers, unless the operation described by Classification 8387 constitutes a separate and distinct enterprise having no connection with the operations covered by Classifications 8392 or 8388.

This classification does not apply to those service station locations at which the sale of rubber tires exceeds 10% of the total gross receipts. Such locations shall be classified as 8388, Rubber Tire Dealers.

Refer to the Standard Industry Classification Procedure for stores to classify the operations of combination gasoline stations and stores.

Classification 8387, Automobile or Automobile Truck Service Stations, contemplates automobile service stations engaged in both the retail sale of gasoline and the mechanical repair of automobiles. Classification 8387 also applies to automobile service facilities that limit services to preventive maintenance such as oil change and lubrication and do not repair worn, damaged or malfunctioning vehicle systems. This classification also applies to the operation of both full and self-service car washes. Towing and Roadside Assistance Operations: Classification 8387 is also assigned to vehicle towing and roadside assistance operations conducted in connection with an automobile service station. While the towing and roadside assistance operations typically represent a small portion of the overall operation of a service station, there are some firms assigned to Classification 8387 that develop most of their payroll in towing and roadside assistance with only one or two employees engaged in automobile service operations.

AUTOMOBILE OR AUTOMOBILE TRUCK REPAIR SHOPS OR GARAGES — no retail gasoline sales — all employees — including estimators, service writers and customer service representatives — N.O.C.

8389

Classification 8389 shall not be used for division of payroll in connection with Classification 8388, Rubber Tire Dealers, unless the operation described by Classification 8389 constitutes a separate and distinct enterprise having no connection with the operations covered by Classification 8388.

This classification does not apply to those automobile repair shop or garage locations at which the sale of rubber tires exceeds 10% of the total gross receipts. Such locations shall be classified as 8388, Rubber Tire Dealers.

Classification 8389, Automobile or Automobile Truck Repair Shops or Garages, contemplates automobile repair facilities specializing in the repair and maintenance of engines, brakes, suspensions, electrical systems, and related automobile components. Towing and Roadside Assistance Operations: Classification 8389 is also assigned to vehicle towing and roadside assistance operations conducted in connection with an automobile repair shop. Towing


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and roadside assistance operations typically represent a small portion of the repair shop’s overall operation.

AUTOMOBILE OR AUTOMOBILE TRUCK BODY AND FENDER REPAIRING AND PAINTING — all employees including estimators, service writers and customer service representatives 8393

Classification 8393, Automobile or Automobile Truck Body and Fender Repairing and Painting, contemplates the repair or replacement of automobile or automobile truck bodies or fenders and subsequent painting of parts that are repaired or replaced. This classification also applies to firms that travel to customer locations to remove dents from automobiles or automobile trucks with the use of hand tools. Towing and Roadside Assistance Operations: Classification 8393 is also assigned to vehicle towing and roadside assistance operations conducted in connection with an automobile body shop. Towing and roadside assistance operations typically represent a small portion of the body shop’s overall operation.


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AUTOMOBILE OR AUTOMOBILE TRUCK DEALERS — all employees other than automobile or automobile truck salespersons — including estimators, service writers and accessory or spare parts sales

8391

This classification shall apply only to those concerns having in addition to proprietors a full-time clerical office force and a regular sales force engaged exclusively in the demonstration and sale of automobiles and/or automobile trucks.

Also refer to companion Classification 8748, Automobile or Automobile Truck Salespersons.

Classification 8391, Automobile or Automobile Truck Dealers, contemplates all of the operations of automobile dealership other than automobile sales or clerical office staff. Operations typically assigned to Classification 8391 include mechanical repairs, parts sales and vehicle preparation. Towing and Roadside Assistance Operations: Classification 8391 is also assigned to vehicle towing and roadside assistance operations conducted in connection with an automobile dealership. Towing and roadside assistance operations typically represent a small portion of the dealership’s overall operation. Automobile dealers may also engage in the transporting or hauling of owned vehicles.

TRUCKING FIRMS — N.O.C. — including terminal employees and mechanics 7219(1)

Trucking firms engaged in hauling under contract, whether for one or more individuals or concerns, shall be classified in accordance with this classification; however, the hauling of logs under contract shall be classified as 2727, Log Hauling.

Classification 7219(1), Trucking Firms, contemplates hauling merchandise for other concerns on a contract basis. This classification contemplates drivers, driver’s helpers, terminal employees and mechanics. Towing and Roadside Assistance Operations: Classification 7219 is also assigned to towing firms that have no automobile service, repair, or storage operations performed at the firm’s fixed facility, but perform only “point A to point B” towing or automobile transport operations. For these firms, a majority of the payroll assigned to Classification 7219 is developed by the tow truck drivers.

The WCIRB also reviewed the vehicle transport operations that are not conducted in the context emergency road service. As indicated below, these operations include those conducted in connection with vehicle dismantling and charity donations.

AUTOMOBILE OR AUTOMOBILE TRUCK DISMANTLING — including the salvaging or junking of parts and store operations

3821

Towing Conducted by Automobile Wrecking or Salvage Yards: While some automobile dismantlers maintain contracts to engage in towing and roadside operations, most of the industry’s vehicle transport activities do not fall within the context of emergency road service conducted on a fee basis for separate concerns; rather vehicles are purchased from a customer and are then transported to the employer’s dismantling yard. These operations have consistently been assigned to Classification 3821, Automobile or Automobile Truck Dismantling – including the salvaging or junking of parts and store operations. In that vehicle dismantlers are engaged in transporting their own vehicles and do not engage in contract towing or emergency road service operations, they are not considered part of the towing and roadside assistance industry.


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Vehicle Transport of Donated Cars: Charitable organizations that solicit the public to donate vehicles typically contract with a towing firm to transport the donated vehicle to a storage facility. Industry representatives also indicated that due to recent tax law changes, the volume of donated vehicles has decreased dramatically over the past few years. As such, the towing of vehicles donated to charity is a small and relatively insignificant segment of the towing and roadside assistance industry. Consistent with the classification procedure for towing, the towing of donated vehicles has consistently been assigned to the employer’s governing classification.

Based on a review of the WCIRB’s inspection report library, WCIRB staff found the following distribution of classification assignments for firms engaged in some form of vehicle towing, roadside assistance or freeway service patrol operations:

Table 1: Count of WCIRB Classification Inspection Reports Describing Towing, Roadside Assistance, or Freeway Service Patrol Operations

Classification

Number of WCIRB Inspection Reports

Describing Towing or Roadside Assistance

8392 Automobile or Automobile Truck Storage Garages or Parking Stations or Lots

428

8389 Automobile or Automobile Truck Repair Shops or Garages 282

8393 Automobile or Automobile Truck Body and Fender Repairing and Painting

244

8387 Automobile or Automobile Truck Service Stations 69

8391 Automobile or Automobile Truck Dealers 36

7219(1) Trucking Firms 46

Classification Analysis As indicated above, since there is no classification that specifically describes towing and roadside assistance operations, such activities are essentially treated as General Inclusions and are assigned to the standard classification that best describes the operations conducted at the policyholder’s fixed location. This results in having the same commercial operations – providing towing and roadside assistance – being assigned to several different classifications. As a result, policyholders engaged in similar operations may be classified differently, and the pure premium rates for some classifications may be significantly impacted by the payroll and loss experience of towing and roadside assistance operations, which are not common to other firms assigned to those classifications. Based upon its review of both the towing industry and the existing automobile service and repair classifications, the WCIRB determined that:

1. The provision of towing and roadside assistance services is a distinct commercial venture that is clearly distinguishable from the operations contemplated under any other standard classification;

2. The provision of towing and roadside assistance services should not be considered an activity that

normally prevails in the business described by any current standard classification;

3. The provision of towing and roadside assistance services falls outside the scope normally contemplated by “drivers and their helpers” as contained in the General Inclusions rule;

4. Providing a separate classification treatment for a firm’s towing and roadside operations would be

consistent with the Standard Classification System’s objective “to group employers into classifications so that each classification reflects the risk of loss common to those employers”; and


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5. Transportation of an employer’s own vehicles – such as that done by automobile dismantlers and

automobile dealerships – does not constitute towing and roadside assistance. Such activities fall within the scope of the “drivers and their helpers” provision of the General Inclusions rule.

In view of the above, the WCIRB evaluated whether the towing and roadside assistance industry meets the criteria for a unique classification. To create a new classification for a group of employers, the industry must: (1) represent a distinct and clearly identifiable group of employers; (2) engage in a relatively homogeneous set of operations; (3) have exposures to hazard that clearly differ from policyholders assigned to other classifications; and (4) be of sufficient size to generate enough data to develop a statistically credible pure premium rate. Based upon its review of the operations, WCIRB staff determined that towing, roadside assistance, and freeway service patrol industry meets the first three criteria:

1. It is easily identifiable from all other industries:

2. The industry’s revenue is generated from a distinct set of relatively similar operations – irrespective of any other automobile service that may be provided at a fixed location; and

3. The industry’s exposure to hazard is distinctly different from that of a fixed location automobile service station, repair shop, or parking lot. Namely, whereas automobile service stations, repair shops, and parking lot employees work at a fixed location in a relatively controlled environment, towing and roadside assistance workers are exposed not only to the hazards of driving – but also to the hazards unique to working at all hours of day and night on the sides of busy roads and highways.6

Further, in that towing and roadside assistance is a distinct and identifiable activity that is conducted away from the policyholder’s primary location, establishing a separate classification procedure for these outside operations would be consistent with the approach taken in several other industries. For example, while the shop machining and repair of commercial equipment may be assigned to one of several classifications (e.g., Classifications 3632, Machine Shops – N.O.C., 3560(1), Machinery Mfg. – commercial food processing equipment, or 3612, Pump or Hydraulic Apparatus Mfg. or Repair – N.O.C., the field installation or repair of the same equipment is separately classified under 3724(1), Millwright Work – N.O.C. – erection or repair of machinery or equipment.) A comparable model could be used to separately classify the towing and roadside assistance operations conducted by automobile service stations, repair shops, dealerships, and parking lots. In view of the above, the WCIRB contacted industry associations including the CTTA, AAA, the Automotive Service Councils of California, the California Automotive Business Coalition, the California Service Station and Automotive Repair Association, and the State of California Auto Dismantlers Association, to assess the extent to which classifying an employer’s towing and roadside assistance operations separately from its other automobile service operations would place an additional record-keeping burden on employers. Industry representatives indicated that the potential burden would be minimal since employers in the towing and roadside assistance industry typically retain dedicated employees to operate towing and service vehicles. This is due to a number a factors including: (1) the distinct drivers license requirements for operating towing vehicles; (2) the contractual requirements regarding driver safety training; and (3) the industry’s focus on keeping its vehicles in constant use. Industry representatives stated that to recoup the cost of operating a tow truck requires a dedicated staff to keep the equipment in consistent use. As such, there typically is no interchange of labor between the employer’s towing and roadside operations and their fixed location automobile repair or service activities. Further, for the same reasons that employers retain dedicated staff to conduct towing and roadside assistance operations, employers do not typically expend the resources necessary to maintain tow trucks and/or service trucks unless the services can generate a relatively significant portion of their revenue. In addition to the cost of acquiring and maintaining the equipment, both motor club and law enforcement

6 Exhibit 1 summarizes by type of injury and cause of accident the claims incurred by: (1) towing and roadside assistance firms assigned to Classifications 8392, 8389 and 8387 and (2) all firms assigned to Classifications 8392, 8389 and 8387. The towing and roadside assistance group accounted for only 6.14% of all claims reported for these three classifications, but over 36% of the death claims, 16% of the permanent claims, and over 10% of any claim with a reported cause to be in connection with a motor vehicle.


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contracts require drivers to undertake extensive training classes, background checks and drug tests. Maintenance of strict safety protocols is usually required for insurance purposes. As a result, there is little incentive for a firm to conduct incidental towing or roadside assistance operations that account for less than 10% of the firm’s gross receipts. Statistical Analysis In view of the above findings that towing and roadside assistance operations are clearly identifiable from other automobile related classifications, WCIRB staff attempted to isolate the payroll and loss data for firms engaged in these towing and roadside assistance operations. This effort was complicated by an inability to disaggregate the payroll and loss data for a policyholder’s towing and roadside assistance data from the remainder of its operations. The above limitation notwithstanding, WCIRB staff used both its library of classification inspection reports and the CTTA membership list to identify risks engaged in towing and roadside assistance operations. Table 2 shows Unit Statistical Reports (USR) by classification for the most recent year of available data: (1) the number of USRs submitted for the group of identified risks engaged in towing and roadside assistance; (2) the portion of all the classification’s USRs that were for members of the study group; (3) the total payroll reported for the study group; and (4) the portion of the classification’s total payroll that was reported by members of the study group.

Table 2: Unit Statistical Reports by Classification – 2005 Policy Year

Count of 2005 USR’s 2005 Payroll

Classification

Risks Engaged in Towing/Roadside

Assistance

Percentage of Total Risks in

Class

Risks Engaged in Towing/Roadside

Assistance

Portion of Total Class Payroll

8392 650 47.86% $163,594,830 35.94% 8393 142 4.94% 72,276,417 7.81% 8389 258 3.07% 60,527,128 6.13% 8387 56 1.72% 22,107,286 2.95% 8391 39 1.85% 112,745,712 3.43% 7219 56 0.91% 19,288,727 0.79%

As indicated in Table 2, more towing and roadside assistance operations are assigned to Classification 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots, than to any other classification. (Representatives of California automotive repair shop and service station associations confirmed that the vast majority of their members do not engage in any towing or roadside assistance operations.) This is particularly significant when viewed in context of the above findings that towing firms assigned to Classification 8392 generate the vast majority of their payrolls in towing or roadside assistance operations. Tables 3 and 4 show the payroll and loss experience and related statistical credibility7 developed under Classification 8392 by firms in the roadside assistance, towing or freeway service patrol industry.

Table 3: Classification 8392 Data for Towing and Roadside Assistance

7 The relativity for each classification in the upcoming policy year is determined based on a comparison between that classification’s actual losses per $100 of payroll and the ratio of losses per $100 of payroll underlying the current pure premium rate. The “credibilities” assigned to a classification are the statistical weights assigned to that classification’s experience as a predictor of future claim experience relative to the loss per $100 of payroll underlying the classification’s current pure premium rate. The predictability or credibilities assigned to a classification’s recent historical experience depends on the volume of indemnity and medical claims incurred during the experience period. The WCIRB strives to have classifications that are fully, or 100%, statistically credible based on historical experience over five or fewer years, which means that the classification’s relativity in the upcoming policy year can be best estimated using only the loss per $100 of payroll experience from the latest two-, three-, four- or five-year periods. Although there is no established minimum acceptable credibility, classifications with credibilities less than one-half have a five-year experience period that is less predictive of future experience in the classification than the loss per $100 of payroll underlying the current pure premium rate.


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Loss to Payroll Ratio at 2009 Policy Year Level

Year Number of

Reports Payroll Losses Loss to Payroll

Ratio

2002 551 133,455,878 6,802,217 5.097

2003 590 141,464,294 10,379,234 7.337

2004 602 159,088,459 8,409,899 5.286

2005 650 163,594,830 7,722,699 4.721

Total 597,603,461 33,314,049 5.575

Credibility

Indemnity Medical

1.00 1.00

Table 4: Comparison of all 8392 to Towing and Roadside Assistance Indicated Classification Relativity at 2009 Policy Year Level

All Classification 8392

Roadside Assistance Study Group (8392) Difference

3.599 5.575 +1.976 (+54.9%)

Residual of Classification

83928 Roadside Assistance Study Group (8392) Difference

2.8039 5.575 +2.772 (+98.9%)

Given that Classification 8392 develops the vast majority of its payroll in towing, roadside assistance and freeway service patrol operations, the above data supports the finding that: (1) the towing, roadside assistance and freeway service patrol industry develops sufficient payroll and loss experience to generate a statistically credible pure premium rate and (2) the industry’s experience is sufficiently different from the affected classifications to warrant a separate classification treatment. WCIRB staff performed a similar analysis for other classifications to which towing and roadside assistance operations are assigned. Tables 5 through 8 present the data for Classifications 8389 and 8387. (See Exhibit 2 for a payroll and loss breakdown of all identified classifications.)

Table 5: Classification 8389 Data for Towing and Roadside Assistance Loss to Payroll Ratio at 2009 Policy Year Level

Year Number of


Ratio

2001 286 59,151,352 2,439,668 4.124

8 The “residual” is the classification relativity data that is remaining after study group’s payroll has been removed. 9 Classification 8392 remains fully credible after removing the data for the towing and roadside assistance group.


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2002 270 56,623,316 1,342,352 2.371

2003 271 55,352,711 4,713,943 8.516

2004 265 56,062,637 2,090,742 3.729

2005 258 60,527,128 3,073,808 5.078

Total 287,717,144 13,660,513 4.748

Credibility

Indemnity Medical

0.59 0.66

Table 6: Comparison of 8389 to Towing and Roadside Assistance Indicated Classification Relativity at 2009 Policy Year Level



2.894 4.748 +1.854 (+64.1%)



2.797 4.748 +1.951 (+69.8%)

Table 7: Classification 8387 data for Towing and Roadside Assistance Loss to Payroll Ratio at 2009 Policy Year Level

Year Number of


Ratio

2001 57 20,108,470 1,033,172 5.138

2002 53 17,835,026 1,415,783 7.938

2003 60 21,107,900 348,416 1.651

2004 60 20,721,928 682,620 3.294

2005 56 22,107,286 1,350,047 6.107

Total 101,880,610 4,830,038 4.741

Credibility

Indemnity Medical

0.25 0.33

Table 8: Comparison of 8387 to Towing and Roadside Assistance


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Indicated Classification Relativity at 2009 Policy Year Level



2.682 4.741 +2.059 (+76.8%)



2.621 4.741 +2.120 (+80.9%)

The above data is consistent with a finding that the payroll and loss experience developed by the towing and roadside assistance industry differs significantly from that of other operations contemplated by the respective classifications.


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Impact Analysis In view of the finding that the towing and roadside assistance industry meets the criteria for a unique classification, staff evaluated the impact that establishing a unique classification would have on (1) the classification relativities for the affected classifications and (2) on policyholders for which all or a portion of their operations are reassigned. As indicated above, the best indicator of the true payroll and loss experience for the towing and roadside industry is that developed by the 8392 study group. This is because the policyholders in the 8392 group develop the vast majority of their payroll in towing, road assistance, and freeway patrol service operations. (With a few exceptions, the payroll and loss data developed by towing and roadside assistance operations for the study groups of policyholders reporting payroll under Classifications 8387, 8389, 8391 and 8393 represent a minority of each risk’s total exposure – and is thus less reflective of the true experience of the towing and roadside operations.) Staff recommends that the payroll and loss data developed by the 8392 study group serve as the underlying data for establishing a new classification. Table 9 compares the classification relativity for all of Classification 8392 to the selected (and the selected limited) for the towing and roadside assistance firms assigned to Classification 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots.

Table 9: Towing and Roadside Assistance Selected Classification Relativity at 2009 Policy Year Level


Towing/Roadside Assistance Study Group

(8392) Selected

Towing/Roadside Assistance (8392) Selected

– limited to 25% change

3.649 5.653 (+54.4%) 4.561 (+25.0%)

Table 10: Classification 8392 – Less Towing and Roadside Assistance Selected Classification Relativity at 2009 Policy Year Level

All Classification 8392 Less Roadside Assistance

Study Group (8392) Selected

3.649 2.842(-22.1%)

Table 11 shows the impact that the proposed reassignment of towing and roadside assistance operations would have on the operations currently assigned to Classifications 8392, 8387, 8389 and 8393.


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Table 11: Impact of Reassigning Towing/Roadside Assistance Operations Selected Classification Relativities at 2009 Policy Year Level

Classification Current Classification

Relativity

Selected-Limited Classification

Relativity – Towing Difference Percent Change

8392 3.649 4.561 0.912 25.0%

8389 2.938 4.561 1.623 55.2%

8387 2.698 4.561 1.863 69.1%

8393 2.354 4.561 2.207 93.8% In that most of the affected policyholders develop the vast majority of their payroll in operations other than towing or roadside assistance, the impact of a new classification will be proportionate to the relative share of payrolls that are reclassified. Tables 12 through 14 show how this impact lessens based on the portion of payroll to be reassigned.

Table 12: Impact on Total Premium Classification 8387 at Policy Year 2009 Level

Percent of Operation Towing

Selected Current Weighted Average

Difference Percent Change Towing (a) Shop (b) Relativity (y) Relativity (x) (a*y) + (b*x)

90% 10% 4.561 2.698 4.375 1.677 62.1%

75% 25% 4.561 2.698 4.095 1.397 51.8%

25% 75% 4.561 2.698 3.164 0.466 17.3%

10% 90% 4.561 2.698 2.884 0.186 6.9%

Table 13: Impact on Total Premium Classification 8389 at Policy Year 2009 Level


Selected CurrentWeighted Average


90% 10% 4.561 2.938 4.399 1.461 49.7% 75% 25% 4.561 2.938 4.155 1.217 41.4% 25% 75% 4.561 2.938 3.344 0.406 13.8% 10% 90% 4.561 2.938 3.100 0.162 5.5%

Table 14: Impact on Total Premium

Classification 8393 at Policy Year 2009 Level


Selected Current Weighted Average


90% 10% 4.561 2.354 4.340 1.986 84.4% 75% 25% 4.561 2.354 4.009 1.655 70.3% 25% 75% 4.561 2.354 2.906 0.552 23.4% 10% 90% 4.561 2.354 2.575 0.221 9.4%

Conclusion and Recommendations


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Based upon its review of classification procedures applicable to roadside assistance, towing and freeway service patrol, the WCIRB finds the following:

1. Roadside assistance, towing and freeway service patrol operations represent a distinct and clearly identifiable industry, conducting a relatively homogenous set of operations that has exposure to hazards that clearly differ from employers assigned to other classifications and is of sufficient size to generate enough data to develop a statistically credible pure premium rate;

2. The towing and roadside assistance industry does not include either: (1) the towing of vehicles that

are owned by the employer; or (2) roadside assistance conducted by employers that do not maintain an agreement with a third party, such as a motor club or a law enforcement entity;

3. The operations of firms performing roadside assistance, towing and freeway service patrol operations are more similar to each other than they are to the automobile service or repair classifications they are currently assigned to based on the current classification procedure for the industry;

4. Towing and roadside assistance operations do not normally prevail in businesses engaged in

automobile service or repair activities;

5. Providing towing and roadside assistance services falls outside the scope of what is normally contemplated by “drivers and their helpers” as contained in the General Inclusions rule; and

6. Establishing a new classification for roadside assistance, towing and freeway service patrol would allow for: (1) a direct classification assignment based upon the actual operations performed, (2) the pure premium rate to be based on the industry’s own experience, and (3) an equitable administration of classification procedure for this industry.

In view of the above, the WCIRB recommends the following:

1. Establish a new classification for automobile or automobile truck towing, roadside assistance, and freeway service patrol operations conducted on vehicles not owned by the employer;

2. Amend the footnote to the automobile or automobile truck service and repair classifications to direct

that towing, roadside assistance and freeway patrol service operations, when conducted on vehicles not owned by the employer, shall be separately classified;

3. Amend Classifications 3821, Automobile or Automobile Truck Dismantling, and 8391, Automobile or Automobile Truck Dealers, to direct that the classification includes the transporting of vehicles owned by the employer; and

4. Add an entry to the USRP’s Rulings and Interpretations Supplement to clarify the classification procedure applicable to the towing, roadside assistance and freeway service patrol industry and provide examples to illustrate the intended application of the proposed classification.

Implementing the foregoing recommendations would require that the following changes be included in the next pure premium rate filing:


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Proposed Changes to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 Related to:

8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots – no repair – including cashiers

8387, Automobile or Automobile Truck Service Stations – all employees – including accessories and spare parts departments and estimators, service writers, customers service representatives and cashiers – N.O.C.

8389, Automobile or Automobile Truck Repair Shops or Garages – no retail gasoline sales – all employees – including estimators, service writers and customers service representatives – N.O.C.

8393, Automobile or Automobile Truck Body and Fender Repairing and Painting – all employees including estimators, service writers and customer service representatives

8391, Automobile or Automobile Truck Dealers – all employees other than automobile or automobile truck salespersons – including estimators, service writers and accessory or spare parts sales.

3821, Automobile or Automobile Truck Dismantling — including the salvaging or junking of parts and store operations

Recommendation Establish Classification 7227, Automobile or Automobile Truck Towing, Roadside Assistance or Freeway Service Patrol. The Towing, Roadside Assistance and Freeway Service Patrol industry constitutes a distinct and identifiable industry of sufficient size to generate a statistically credible pure premium rate.

PROPOSED

AUTOMOBILE OR AUTOMOBILE TRUCK TOWING, ROADSIDE ASSISTANCE OR FREEWAY SERVICE PATROL — for vehicles not owned by employer

7227

This classification applies to vehicle towing, roadside assistance and freeway service patrol operations that are conducted away from premises occupied and operated by the employer. This classification also includes all operations – including cashiering, vehicle retrieval, and maintenance of the employer’s own vehicles – conducted in connection with the storage of impounded vehicles that the employer tows to its premises.

“Roadside assistance” refers to services provided to the vehicle owner under an agreement with a third party (such as a motor club or law enforcement agency). Contemplated services include changing tires, jump-starting batteries, supplying a small amount of gasoline or performing minor vehicle repairs such as reattaching ignition wires or battery cables.

This classification does not apply to automobile or automobile truck shipping operations.

* * * * * * *


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Recommendation Amend the footnote for Classification 8387, Automobile or Automobile Truck Service Stations, all employees – including accessories and spare parts departments and estimators, service writers, customer service representatives and cashiers – N.O.C., to direct that towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified.

PROPOSED

AUTOMOBILE OR AUTOMOBILE TRUCK SERVICE STATIONS — all employees — including accessories and spare parts departments and estimators, service writers, customer service representatives and cashiers — N.O.C.

8387

Classification 8387 shall not be used for division of payroll in connection with Classifications 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots, or 8388, Rubber Tire Dealers, unless the operation described by Classification 8387 constitutes a separate and distinct enterprise having no connection with the operations covered by Classifications 8392 or 8388.

This classification does not apply to those service station locations at which the sale of rubber tires exceeds 10% of the total gross receipts. Such locations shall be classified as 8388, Rubber Tire Dealers.

Towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified as 7227, Automobile or Automobile Truck Towing, Roadside Assistance or Freeway Service Patrol.


Refer to the Standard Industry Classification Procedure for stores to classify the operations of combination gasoline stations and stores.

* * * * * * * Recommendation Amend the footnote for Classification 8389, Automobile or Automobile Truck Repair Shops or Garages – no retail gasoline sales – all employees – including estimators, service writers and customer service representatives – N.O.C., to direct that towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified.

PROPOSED

AUTOMOBILE OR AUTOMOBILE TRUCK REPAIR SHOPS OR GARAGES — no retail gasoline sales — all employees — including estimators, service writers and customer service representatives — N.O.C.

8389

Classification 8389 shall not be used for division of payroll in connection with Classification 8388, Rubber Tire Dealers, unless the operation described by Classification 8389 constitutes a separate and distinct enterprise having no connection with the operations covered by Classification 8388.


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This classification does not apply to those automobile repair shop or garage locations at which the sale of rubber tires exceeds 10% of the total gross receipts. Such locations shall be classified as 8388, Rubber Tire Dealers.



* * * * * * * Recommendation Amend Classification 8391, Automobile or Automobile Truck Dealers – all employees other than automobile or automobile truck salespersons – including estimators, service writers and accessory or spare parts sales, to direct that the classification includes the transporting of vehicles that are owned by the employer. In addition, amend the classification footnote to direct that towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified.

PROPOSED

AUTOMOBILE OR AUTOMOBILE TRUCK DEALERS — all employees other than automobile or automobile truck salespersons — including estimators, service writers, and accessory or spare parts sales and the transporting of vehicles that are owned by the employer

8391

This classification shall apply only to those concerns having in addition to proprietors a full-time clerical office force and a regular sales force engaged exclusively in the demonstration and sale of automobiles and/or automobile trucks.

Also refer to companion Classification 8748, Automobile or Automobile Truck Salespersons.



* * * * * * * Recommendation Amend the footnote for Classification 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots – no repair – including cashiers, to direct that towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified.

PROPOSED


21


AUTOMOBILE OR AUTOMOBILE TRUCK STORAGE GARAGES OR PARKING STATIONS OR LOTS — no repair — including cashiers

8392

Classification 8392 shall not be used for division of payroll in connection with Classifications 8387, Automobile or Automobile Truck Service Stations, or 8389, Automobile or Automobile Truck Repair Shops or Garages, unless the operation described by Classification 8392 constitutes a separate and distinct enterprise having no connection with the operations covered by Classifications 8387 or 8389.

This classification is intended to cover automobile or automobile truck storage garages or parking stations where the operations are restricted to the storing or parking of automobiles or automobile trucks with incidental sale of gasoline or oil or servicing, such as washing, polishing or greasing, but does not apply to an employer engaged in repairing automobiles or automobile trucks. Such employers shall be assigned to the appropriate automobile repairing or servicing classification.

Parking attendants on the payroll of enterprises such as, but not limited to, hotels, restaurants, stores, apartment complexes, commercial or industrial buildings, or theaters that operate parking facilities for their own customers or tenants shall be classified with the enterprise.

This classification does not apply to the storage of impounded vehicles that the employer tows to its premises.



* * * * * * * Recommendation Amend the footnote for Classification 8393, Automobile or Automobile Truck Body and Fender Repairing and Painting – all employees including estimators, service writers and customer service representatives, to direct that towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified.

PROPOSED

AUTOMOBILE OR AUTOMOBILE TRUCK BODY AND FENDER REPAIRING AND PAINTING — all employees including estimators, service writers and customer service representatives

8393



* * * * * * *

Recommendation


22


Amend Classification 3821, Automobile or Automobile Truck Dismantling — including the salvaging or junking of parts and store operations, to direct that the classification includes the transporting of vehicles that are owned by the employer. Also, add a footnote to direct that towing, roadside assistance, and freeway service patrol operations when conducted on vehicles not owned by the employer shall be separately classified.

PROPOSED

AUTOMOBILE OR AUTOMOBILE TRUCK DISMANTLING — including transport of vehicles owned by the employer, the salvaging or junking of parts, and store operations

3821



* * * * * * * Recommendation Amend Part 3, Standard Classification System, Section VIII, Abbreviated Classifications — Numeric Listing, of the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 to reflect the proposed recommendations above.

PROPOSED Section VIII — Abbreviated Classifications — Numeric Listing

7227 Automobile or Automobile Truck Towing, Roadside Assistance or Freeway Service Patrol

Classification and Rating Committee Meeting Minutes for July 28, 2009

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WCIRB Ca l i f o rn ia ®

Recommendation The WCIRB intends to add the following entry to the Rulings and Interpretations Supplement of the USRP. Rulings and Interpretations – Classification Matters

Automobile Towing and Roadside Assistance

7227 Automobile or Automobile Truck Towing, Roadside Assistance or

Freeway Service Patrol This classification applies to firms that: (1) engage in towing of vehicles that are not owned by the employer, or (2) provide freeway service patrol operations or roadside assistance under an agreement with a third party such as a motor club or law enforcement entity. Operations most common to the towing, freeway service patrol, and roadside assistance industry include:

Automobile or Automobile Truck Towing: Employers contract with vehicle owners or third parties including motor clubs, private property owners, and law enforcement entities to tow disabled, illegally parked, abandoned or wrecked vehicles. As required, the driver transports the vehicle to a customer-designated location, a location determined by the law enforcement entity, or to a vehicle impound or storage facility. Classification 7227 includes all operations in connection with the storage of impounded vehicles that the employer tows.

Roadside Assistance and Emergency Road Service: Employers contract with third parties including motor clubs and law enforcement entities to dispatch service vehicles to the location of the disabled vehicle. As necessary to get the vehicle operational, employees change tires, jump-start batteries, supply a small amount of gasoline or perform minor vehicle repairs such as reattaching ignition wires or battery cables. Only firms engaged in these activities under a third party agreement are considered to be engaged in roadside assistance operations assignable to Classification 7227, Automobile or Automobile Truck Towing, Roadside Assistance and Freeway Service Patrol.

Freeway Service Patrol: Towing and roadside assistance firms contract with a law enforcement or other government entity to drive the freeways and highways during commute hours and to either tow disable vehicles or to make the vehicle operable by providing services including, but not limited to, supplying gasoline, jump-starting batteries, and changing tires. If vehicles cannot be made operable within a specified time period, employees will tow the stranded vehicle to locations designated safe by the law enforcement entity.

It is not uncommon for firms engaged in towing, freeway service patrol and roadside assistance operations to also operate a fixed location for the fee-based service and repair of automobiles. In such instances, the towing and roadside assistance operations shall be classified separately from the service and repair activities conducted at the fixed location. The payroll of workers that engage in both automobile service/repair and towing/roadside assistance operations shall be divided between Classification 7227 and the appropriate automobile service or repair classification provided complete and accurate payroll records are maintained pursuant to Section V, Rule 3, Division of Single Employee’s Payroll.

Examples

The following examples are illustrative of the classification procedure applicable to towing and roadside assistance operations.

1. An employer contracts with third parties including motor clubs, private property owners, and law enforcement agencies to tow illegally parked or disabled vehicles. In support of

Classification and Rating Committee Meeting Minutes for July 28, 2009

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WCIRB Ca l i f o rn ia ®

these operations, this employer retains workers to operate an impound yard for the storage of towed vehicles.

Because the yard activities – including cashiering, vehicle retrieval, and maintenance of the employer’s own vehicles – are conducted in connection with the storage of impounded vehicles that the employer tows, these activities are assignable to Classification 7227, Automobile or Automobile Truck Towing, Roadside Assistance and Freeway Service Patrol.

2. An employer operates an automobile repair shop. In addition, the employer contracts with motor clubs to provide towing and roadside assistance operations. Drivers are dispatched to the location of the disabled vehicle. In order to make the vehicle operational. Employees, as necessary, change tires, jump-start batteries, supply a small amount of gasoline or perform minor vehicle repairs such as reattaching ignition wires or battery cables.

The automobile repair operations are assignable to Classification 8389, Automobile or Automobile Truck Repair Shops or Garages — no retail gasoline sales — all employees — including estimators, service writers and customer service representatives — N.O.C. The towing and roadside assistance operations are assignable to Classification 7227, Automobile or Automobile Truck Towing, Roadside Assistance and Freeway Service Patrol. If an employee interchanges between the automobile repair and the towing/roadside assistance operations, then his or her payroll may be divided between Classifications 8389 and 7227 in accordance with the USRP at Section V, Rule 3, Division of Single Employee’s Payroll.

3. An employer operates an auto-body shop. In support of this operation, the employer retains drivers to tow inoperable vehicles in need of body repair to the employer’s body shop location. The employer does not have a contract with a third party to provide towing or roadside services. The employer does not tow vehicles to any other location.

The automobile body shop operations are assignable to Classification 8393, Automobile or Automobile Truck Body and Fender Repairing and Painting. Because the employer is towing vehicles that it does not own, all towing operations are assignable to Classification 7227, Automobile or Automobile Truck Towing, Roadside Assistance and Freeway Service Patrol, If an employee interchanges between the automobile body repair and the towing operations, then his or her payroll may be divided between Classifications 8293 and 7227 in accordance with the USRP at Section V, Rule 3, Division of Single Employee’s Payroll.

4. An employer operates an automobile repair facility. The employer does not contract with any third parties to provide towing or roadside assistance operations. This employer receives calls from customers whose vehicles require service but they cannot bring their vehicle to the employer’s location. As calls are received, the employer sends one of its mechanics to the customer’s location to provide the needed services.

Because the employer does not: (1) engage in any towing or; (2) provide freeway service patrol operations or roadside assistance service under a third party agreement, the above operations are considered incidental to the employer’s automobile repair operations and are assignable to the appropriate classification such as 8387, Automobile or Automobile Truck Service Stations, or 8389, Automobile or Automobile Truck Repair Shops or Garages.

1221 Broadway, Suite 900 Oakland, CA 94612

Voice 415.777.0777 Fax 415.778.7007

www.wcirb.com [email protected]

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