COVID-19: Workers' Compensation Guidance
As businesses continue to address coronavirus-related challenges, Riddle Insurance is standing alongside clients to provide guidance and support wherever possible. Many employers have questions regarding Workers’ Compensation Insurance, so we are providing you with information from the NCCI (National Council on Compensation Insurance). NCCI is the source for establishing classifications, payroll rules, rating guidelines and Experience Modification Factors used by most insurance companies.
Please understand that information continues to emerge regularly. This information is coming directly from NCCI as of April 17, 2020. Of course, if you have concerns that we can help you with, please let us know.
Questions You May Have
A business has suspended operations due to COVID-19, but continues to pay employees, although they are at home and not working. Is this payroll included in the premium calculations for workers compensation?
The simple answer is no. The employer maintains accurate records of what payroll was made for work vs. non-working time. The non-working payroll will be reported on the payroll audit in order for NCCI to maintain statistical data, however, no premium will be charged for it.
NCCI POSITION STATEMENT:
NCCI recognizes that circumstances around COVID-19 are extraordinary and warrant an expedited rule change to address the question of payroll for employees who are being paid but are not working as it relates to the basis of premium. If approved, this rule change will be distinct from “idle time” under our current Basic Manual rules (Rule 2-F-1), and a corresponding statistical code 0012 will be created for reporting this payroll. This payroll will not be used in the calculation of premium.
Other actions are underway by some companies and individual states to respond to this question, so an emphasis on creating as uniform an approach as possible is being pursued for approval by regulators. The details of the proposed rule changes will be included in a filing that will be submitted to state regulators in all NCCI states. The filing is expected to be made the week of April 20.
An employer has limited operations due to COVID-19. As a result, some employees are placed into new roles for the duration of the pandemic. Will a different rate and classification apply for those changed employees?
If the employee’s job has completely changed, then a new classification and corresponding rate should apply for the new or temporary reassignment of the job duties. The employer should maintain appropriate records of dates and description of employees’ job changes. We expect changes in this area primarily to be employees changing roles to a clerical position, whether working from the employer’s location(s) or from their home.
NCCI POSITION STATEMENT:
As stated in Basic Manual Rule 1-A, subject to certain exceptions, it is the business of the employer within a state that is classified, not separate employments, occupations, or operations within the business. Therefore, the classification of the employees working in new roles might not change. However, there may be situations where a change in classification could occur, such as when:
- The employer’s operations have changed to a different classification, or
- An employee’s occupation for the employer has changed (similar to when an employee receives a job promotion) to a different classification that may be applied to the employer’s policy (e.g., an employee changes to a clerical position and Code 8810—Clerical Office Employees NOC may be applied to the policy).
In accordance with Basic Manual Rules 1-D-3 and 2-G, the employer would be responsible for maintaining separate payroll records for the change in operations or the wages earned for an employee whose occupation has changed. If these records are not maintained, then all payroll would be assigned to the highest rated applicable class code.
If an employer has changed its operations as a result of COVID-19, will a different classification and rate apply for its employees during the change in operations?
Yes, it will if there is a material change in the operations of the employer and the employees are performing different job duties. Once the normal operations of the employer resume, the classification(s) and rate(s) will revert to those previously used. The employer shall maintain appropriate dates and records of the change in operations of the employer.
NCCI POSITION STATEMENT:
NCCI’s Basic Manual Rule 1-F-1 addresses changes or corrections in classifications due to changes in an employer’s operations. The temporary interruption or suspension of normal business activities caused by COVID-19 may qualify as a change in operations. For example, if an employer continues to pay its employees while they are working out of their homes (telecommuting) rather than an office, carriers may consider a change from the employer’s governing classification to Code 8810—Clerical Office Employees NOC or Code 8871—Clerical Telecommuter Employees, or other appropriate classifications based on the duties of the employees while normal business operations are interrupted or suspended. Once normal business operations resume, appropriate classifications should be applied.
Find the specific description of Code 8871 using NCCI’s Class Look Up tool. To access it, you need a user ID and password (at no charge). If you don’t have these, please contact our Customer Service Center at 800-622-4123 and select the Products and Services option.
You can review the complete list of insights from NCCI on their website: Coronavirus FAQs.
We Are In This Together
As you all know, we have not faced a pandemic in the United States in modern times, and information on Workers’ Comp continues to emerge. Regarding the Q&A presented here, NCCI provides standard guidance that is then approved, interpreted, and enforced by individual states. Insurance carriers will confirm regulatory, legislative, and enforcement changes as a result of COVID-19 on a state-by-state basis.
The Riddle Insurance team is sharing this information to provide guidance as each of us responds to this crisis. Your specific circumstances may be an exception. Please keep in mind, it is ultimately up to the Department of Insurance in each state to adopt NCCI’s rules and your insurance carrier to interpret the application of the rules.
We are committed to helping you understand how these changes can help your business. We are in this together and are here to assist you any way possible.
Please stay safe and healthy!