I want to take a moment and share with you four recent major developments affecting employer’s workers compensation pricing & coverage. Below you will see I have attempted to give a brief summary to get to the bottom of what happening for employers while removing all of the “technical language”. I have used abbreviations for the Workers Compensation Insurance Rating Bureau (WCIRB), Department of Insurance (DOI) & National Council of Compensation Insurance (NCCI) and you will note below the 4 points that I give a little more color on these 3 organizations.
1. Summary: During the statewide California Shelter in Place order if you have been paying your employees, regardless of what they normally do for your business, to stay at home and handle clerical tasks for your business you can split their category.
- What this means: The WCIRB has recommended to the DOI that a single employee’s payroll may be divided between clerical and another classification only once during this period effective as of the statewide stay at home order and concluding 60 days after the order is lifted.
- Example: You are a construction business and are closed because of the order. You keep your employees on payroll and instead of them working in the field you have some or all handle clerical tasks for the business remotely from home. Normally, under most circumstances 100% of the payroll is to be assigned to the highest rated class code of the job duties the employee performs. This new recommendation to the DOI allows for the period the employee was handling remote clerical duties to be put into the clerical rate which is significantly less.
- Why this is important: First, this has never happened before to the best of my knowledge. Second, this saves employers valuable premium dollars. Finally, we expect the DOI to approve the WCIRB recommendation.
- What you need to do: Keep accurate payroll ledgers (field versus office/clerical during the stay at home order).
- What about outside of California? For many other states outside of California the equivalent is the NCCI & they have made similar recommendations to the various different State’s DOIs. The NCCI may assign code 8871 which I believe would be the clerical equivalent.
2. Summary: During the statewide California Shelter in Place order if you have kept your employees on payroll however they have not been working for you in any capacity a new category has been created for the final audit.
- What this means: The WCIRB has recommended to the DOI that effective as of the date of the California statewide stay at home order and concluding 30 days after the order is lifted, payments made to an employee, while the employee is performing no duties of any kind for the employer shall be excluded.
- Example: You are a restaurant group and are closed because of the order. You keep your employees on payroll however they are not doing any work for you whatsoever. This new recommendation to the DOI allows for the payroll for the period of time listed above to be put into a newly formed code of 0012 at final audit.
- Why this is important: First, this has never happened before. Second, this saves the employer valuable premium dollars. Finally, we expect the DOI to approve the WCIRB recommendation.
- What you need to do: Same as above, keep accurate payroll ledgers for the employees who were paid during the above time period but not working at all.
- What about outside of California? The NCCI has adopted the same code of 0012 for employer’s final audits.
3. Summary: The WCIRB has recommended to the DOI that a workers compensation claim arising directly from a diagnosis of COVID-19 with an accident date on or after 12/1/2019 would be excluded from the experience modification rating calculations of the individual employer.
- Example: Normally all workers compensation claims are reported to the WCIRB and the employer’s experience rating will be effected on any and all claims for a certain period of time.
- Why this is important: COVID-19 workers compensation claim(s) will not cause an adverse effect to the employer’s individual experience modification factor.
- What you need to do: Report the claim as you normally do.
- What about outside of California? The NCCI has made the same recommendation and has created a new claim ID code of “Catastrophe Number 12”. California has also adopted the exact same claim ID code.
4. Breaking News (Summary): On the evening of May 6th California Governor Gavin Newsom announced workers compensation benefits for workers who contract COVID-19.
- Ok, I have read conflicting reports today. One reports reads the executive order is for essential workers & but every other report I am reading plus the executive order found HERE does not limit to just essential workers. Presuming it is for all workers, the burden of proof that the COVID-19 was/was not contracted at work shifts from the employee to the employer. Clearly this would be near impossible for an employer.
- From a future premium cost perspective should you as the employer be concerned? Well, no, as the above recommendation from the WCIRB/NCCI is that COVID-19 claims do not go into the experience modification factor.
- What about outside of California? I believe this will be handled on a state by state basis depending on what the governor announces.
- What is the roll of the WCIRB? They are the governing workers compensation organization for California. More information can be found HERE
- What is the roll of the NCCI? They are the governing workers compensation organization for many States outside of California. More information can be found HERE
- What is the roll of the DOI in all of this? The WCIRB or the NCCI make recommendations to the DOI but ultimately the DOI has to sign off on the recommendations. In the first 3 matters above I strongly believe the DOI will sign off at the July 1, 2020 meeting.