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Employee classification dispute

Employee classification dispute

December 27
12:53 2017

Employee classification dispute

Performance Auto Collision Center, Inc., operated an automobile repair and body shop at several locations in Alpharetta, Georgia. In 2012, Performance Auto applied for workers compensation insurance with Bridgefield Casualty Insurance Company. At the time the initial policy was issued and during the subsequent renewal at issue, Performance Auto’s employees were assigned to two separate classifications—clerical and auto body painting/repair—for the purpose of assessing the insurable risk, which along with payroll would be used to calculate the initial premium. Under the terms of the policy, however, the assessment of premium at the beginning of the policy period was considered to be an estimate, and the final premium amount due could be adjusted based on an audit conducted at the end of the policy period. Specifically, Part Five of the policy provided:

  1. Final Premium

The Premium shown on the Information Page, schedules, and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you. The final premium will not be less than the highest minimum premium for the classifications covered by the policy.

In October 2014, Bridgefield performed a final audit for the 2013-2014 policy period, which resulted in a reclassification of certain employees and an increase of $27,497.38 in the final premium amount billed to Performance Auto. Performance Auto disputed the reclassification and refused to pay the final premium amount, and Bridgefield filed suit to recover the balance it alleged was due. Performance Auto filed an answer and counterclaim, contending that through an error committed by a third party it had overpaid its workers compensation premiums to Bridgefield by $7,246.90 a month and thus sought a refund of that amount, or a setoff of that amount against any amount it might be found to be liable to Bridgefield for the final premium.

Bridgefield filed a motion for summary judgment based on the final audit, and on a December 2013 inspection and classification report conducted at Performance Auto’s behest by the National Council on Compensation Insurance (NCCI), which found that the front office workers should be classified as auto body repair instead of clerical because the front office area was not physically separated from the body repair part of the building by walls and partitions. Bridgefield also sought dismissal of Performance Auto›s counterclaim because Bridgefield had no relationship with the third party to which Performance allegedly overpaid its premiums.

Performance Auto opposed the motion, arguing that an audit performed by a different insurer for the 2014-2015 year supported its classi-fication of certain front office workers as clerical. Performance Auto also submitted the affidavit of its owner, Sal Akturk, who opined that the job duties, descriptions, functions, and physical locations of Performance Auto’s employees had remained the same during the 2013-2014 policy period through the date of the subsequent audit. Performance Auto also submitted the affidavit of its insurance account representative, Allison Wooten, who stated she was familiar with Performance Auto’s business operations and physical layout during both the policy period and subsequent audit time frame and that its business operations, including the duties of its employees, and physical layout had remained the same during the two consecutive policy periods. Wooten also attached photographs to her affidavit, which she averred showed that the front office area was physically separated from the repair part of the shop by partitions and walls, contrary to the findings stated in the NCCI report. Performance Auto argued that this evidence was sufficient to create a jury issue concerning the factors that should be used to classify its employees and which employees should be classified as clerical or body repair workers.

The court granted summary judgment to Bridgefield, and Performance Auto appealed.

On appeal, the court addressed Bridgefield’s argument that the subsequent audit was irrelevant because it was performed for a different policy period and for a different insurer, pointing out that the Akturk and Wooten affidavits sufficiently established that Performance Autos business operations, including the job duties, descriptions and functions of its employees, as well as its physical layout of the disputed front office area, had remained unchanged from the policy period to the time the subsequent audit was conducted. Contrary to Bridgefield’s contention on appeal, the court said, Wooten did not offer this opinion as an expert but as someone who was familiar with Performance Auto’s business during the relevant time periods in connection with the policy at issue. Performance Auto presented evidence showing that the two audits classified employees doing the same jobs differently, as well as sufficient evidence, including the photographs attached to Wooten’s affidavit, to create a disputed issue of fact for the jury to resolve concerning the classification of workers. Although Bridgefield argued that the subsequent audit was not specific enough, the court noted that it contained a list of the specific employees classified by the auditor as clerical. The appellate court reversed the trial court’s order and remanded the case to the trial court for further proceedings.

Performance Auto Collision Center Inc. vs. Bridgefield Casualty Insurance Company-Court of Appeals of Georgia-August 10, 2017-2017 WL 3430227.

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