Opinion
No. 28882
Decided June 24, 1942.
Workmen's compensation — Classification of occupations to fix rates of contribution — Section 35, Article II, Constitution — Degree of hazard of occupation engaged in by employer, comprehended — Hazard depends upon character of work jointly engaged in, when — Building-construction premium rate applied to general building contractor — Separate classification and rating of various employees, not required.
1. Authority conferred upon the Legislature by Section 35, Article II of the state Constitution, "to classify all occupations," comprehends a classification of each and every occupation according to degree of hazard affecting the occupation engaged in by an employer.
2. Whatever the nature of the work of the individual employees of a general building contractor or the part performed by each in the organized force of the employer, the hazard of the employment depends upon the character of the work in which all are jointly engaged, whether the collective term applied thereto be occupation, industry or business.
3. The action of the Industrial Commission in applying to the pay roll of a general building contractor the premium rates applicable to the classification denominated "Building Construction" and in refusing to separately classify and rate the several occupations and functions of relator's various employees doing work on the building which he has contracted to erect is not violative of, but in conformity with, Section 35, Article II of the state Constitution.
IN MANDAMUS.
This is an original action in mandamus in this court. The issues are made by the petition of the relator, James McHugh, for a writ of mandamus and a general demurrer filed on behalf of the respondent, the Industrial Commission of Ohio.
The relator alleges that he is an employer of more than three persons and therefore a contributor to the state insurance fund under risk No. 138295. Relator is the contractor for a portion of the work in connection with the construction by the Cincinnati Metropolitan Housing Authority of a certain government housing project at Cincinnati, Ohio, known as The Winton Terrace Project, consisting of 92 buildings of brick construction, two stories in height and containing in all 604 private residence units.
Relator says that he has sublet to various contractors all the work covered by his contract except the concrete and cement work, brick work and stone setting, and the carpenter work, which relator is performing and which is the only work in which his employees are engaged. The street paving, sewer and water mains, heating systems, plumbing and hot water heating, and the electrical work are separate contracts made by the Cincinnati Metropolitan Housing Authority with other contractors, and relator has no interest in these contracts and is performing no work in connection with these contracts.
Relator says that on May 24, 1940, the respondent Industrial Commission assigned to the relator classification or manual No. 5601, appearing in its manual of premium rates as follows:
"Manual No. Description of Industry. Premium Rate. ------ --- ----------- -- --------- ------- ---- "5601 General building constr- $4.50 per uction including all $100 of operation incidental thereto, pay roll. with the exception of the erection of structural iron and steel."
Since that date relator has been compelled to report his pay rolls under and pay premiums in accordance with manual No. 5601.
Relator further says that his employees who are carrying out his portion of the contract above referred to are engaged in various occupations, such as brick and stone masons, carpenters, cement workers and others; that the respondent has heretofore separately classified such occupations and has established rates of premiums applicable thereto, which classifications and rates of premium are and have been for many years published in its manual of premium rates above referred to; and that the relator has demanded the right to report his pay rolls in accordance with such classifications and to pay premiums in accordance with the rates established therefor, but the respondent has refused and still refuses to permit him so to do.
Relator charges that the actions of the respondent are unjust, unlawful, capricious and a gross abuse of discretion and in direct violation of the provisions of Section 35, Article II of the Constitution of the state of Ohio, and that, by reason of respondent's action as aforesaid, relator has been compelled to contribute into the state insurance fund a sum, the amount of which the relator is unable definitely to state, in excess of the amount he would have contributed if his employees had been classified in accordance with the provisions of Section 35, Article II of the Constitution of Ohio.
Relator therefore prays that a writ of mandamus issue commanding the respondent to classify the occupations of his employees engaged in the work above set forth according to their degree of hazard, to compute the premiums upon the basis of such classifications and to refund to relator the premiums paid in excess of the amount so computed.
Messrs. Arnold, Wright, Purpus Harlor and Mr. Earl F. Morris, for relator.
Mr. Thomas J. Herbert, attorney general, and Mr. E.P. Felker, for respondent.
The specific question of law presented to the court upon argument of the demurrer to the petition is whether the Industrial Commission may apply to the relator's pay roll the premium rates applicable to a general contractor instead of the separate rates covering the various operations actually performed by his employees on the building which he has contracted to erect.
It is the contention of the relator that the actions of the commission in refusing to separately classify and rate the occupations of relator's employees "is unlawful and a violation of Section 35, Article II of the Constitution of Ohio."
The constitutional provision is in part as follows:
"Laws may be passed establishing a board which may be empowered to classify all occupations, according to their degree of hazard, to fix rates of contribution to such fund according to such classification * * *."
Prior to the adoption of this constitutional provision a workmen's compensation law had been enacted which contained a provision (in a section codified as Section 1465-53, General Code, 102 Ohio Laws, 527) that "the State Liability Board of Awards shall classify employments with respect to their degree of hazard," etc.
That section was amended February 26, 1913, the only change in the above-quoted portion being the substitution of the word "occupations" for "employments," thus conforming with the language of the constitutional provision.
The workmen's compensation law was amended in several respects in 1919 (108 Ohio Laws, pt. 1, 314), and it was then that the words "or industries" were inserted in Section 1465-53, General Code, so that it now reads: "The Industrial Commission of Ohio shall classify occupations or industries with respect to their degree of hazard," etc.
It is the contention of the relator that the Legislature thereby attempted to extend the jurisdiction and increase the power of the Industrial Commission beyond that comprehended in the terms of the constitutional provision authorizing its establishment, and that the action of the Industrial Commission complained of was based upon and pursuant to the supposed additional authority conferred by the statutory amendment in question.
If in the respect stated the powers conferred by the Legislature upon the Industrial Commission are inconsistent with or contrary to those authorized by the constitutional provision, the former must of course be disregarded. The constitutional provision will govern and control. Hence our question here is primarily whether the classification made in this instance is violative of Section 35, Article II of the Constitution.
The relator's entire contention is based upon the theory that "occupations," as that term is used in the constitutional provision, relates to the work of each employee and not to the business of the employer, and therefore that his rate of premium should be based upon his pay rolls in accordance with the particular kind and class of service being performed by each of his various employees in and about the building which he is engaged in erecting. He asserts that it is unconstitutional to fix premium rates based on the experience of hazard in the industry employing the workman. If that theory is correct, the Industrial Commission has been seriously at fault throughout the entire period of its administration of the workmen's compensation law, particularly with reference to making classifications with respect to degrees of hazard, determining the risks of different classes and fixing the rates of premium.
This very contention was made by the relator in State, ex rel. Reaugh Construction Co., v. Industrial Commission, 119 Ohio St. 205, 162 N.E. 800, the first case before this court involving a challenge of premium rates fixed and applied by the commission. In that case it was complained that the commission refused to permit the relator "to segregate its pay roll among the available classifications in defendant's manual of rates."
In the discussion of the question presented in that case, it was developed that it was considered "not only impracticable but physically impossible to classify the occupation of an employee" and therefore the system of classification adopted and applied by the commission has been based upon the nature of the employer's business "and not the various functions that he may do that make up his particular business."
The court has heretofore considered the meaning of the word "occupations" as it is used in Section 35, Article II of the Constitution. Quoting from the opinion of Judge Jones in State, ex rel. Powhatan Mining Co., v. Industrial Commission, 125 Ohio St. 272, at page 276, 181 N.E. 99, 82 A. L. R., 938:
"The legislative authority 'to classify all occupations,' as we view and construe the phrase, comprehends a classification of each and every occupation according to the degree of hazard affecting the individual occupation engaged in by an employer. The various provisions of the Constitution connote that meaning; their underlying spirit contemplates a purpose, not only to provide compensation to workmen and their dependents, but to preserve, as far as possible, the factor of safety in the conduct of an employer's particular business, and to prevent loss of life and injuries to his employees."
It is to be observed that throughout the service of the Industrial Commission, as evidenced by its rules and rates set forth in its manual issued at various periods, it has used the terms "occupations" and "industry" interchangeably, but always with reference to the business of the employer rather than the work performed by the employee. Such appears also to be the usage of those terms in other states having workmen's compensation laws. As pointed out in the Reaugh case above referred to, the hazards of an individual carpenter, for instance, "are not the same in every occupation where a carpenter may be employed."
The commission must be permitted to deal with the difficult problem of classification of rates in a practical manner and permitted a wide range of discretion in order to carry out the paramount purpose of the authority conferred by the Constitution "to classify all occupations, according to their degree of hazard, to fix rates of contribution to such fund according to such classification, and to collect, administer and distribute such fund, and to determine all rights of claimants thereto."
It is the degree of hazard that is to be ascertained, for thereon depends the rates of contribution required of the employer. It seems clear that whatever be the nature of the work performed by an employee and whatever be his part in the organized force operated by the employer, the hazard of the employment depends upon the nature of the work being done by all together, whether the collective term to be applied thereto be occupation, industry or business.
In the case of State, ex rel. River Mining Co., v. Industrial Commission, 136 Ohio St. 221, 24 N.E.2d 947, the court announced the conclusion that "Employees of different occupations may all come under the manual applied to a particular industry. * * * In other words there is no requirement that each occupation or type of operation within a given industry be classified or rated separately."
We quote the following statement from the opinion of the court in the Reaugh case, supra, which is pertinent here:
"The experience of men, expert in this department of investigation, whose reports are founded upon experience touching the various hazards of industries and occupations, should be given important consideration; and no doubt the reports of its statisticians and actuaries were followed by the Ohio commission in making its classification of occupations or industries 'with respect to their degree of hazard.' Section 1465-53, General Code.
"The commission was of opinion that employers or building contractors doing business of the generally large character that this relator did should fall within the classification which required that occupation or industry to pay an average fixed premium on all payroll employees engaged in that class. This classification and its determination are committed to the sound discretion and judgment of the commission."
It is our conclusion, therefore, that the action of the Industrial Commission in applying to the relator's pay roll the premium rates applicable to a general contractor and in refusing to separately classify and rate the several occupations or functions of relator's various employees doing work on the building which he has contracted to erect is not violative of but in conformity with Section 35, Article II of the state Constitution. It follows that the demurrer to the petition is sustained and writ denied.
Writ denied.
WEYGANDT, C.J., TURNER, WILLIAMS, HART and ZIMMERMAN, JJ., concur.
BETTMAN, J., not participating.