Summary of experience rating rules for joint ventures
The Experience Rating Plan Manual Rule 5.D.2., provides rules on Joint Ventures. A Joint Venture is a commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities are established by a joint venture agreement.
Of significance is that the “participating entities maintain a common bank account, payroll, and business records.” The agreement should specify that such a structure has been established.
Since the joint venture is a new legal entity, we should treat each person as an employee (unless the agreement specifies otherwise) and include payroll for each in the premium calculation.
A joint venture will generate its own experience rating modification. Until the joint venture’s experience qualifies for experience rating, the carrier calculates its modification by using “An arithmetic average of the experience rating modifications of the participating entities.”