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Proposed Changes Could Have a BIG Impact on Work Comp Premiums

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Workers’ Compensation Rating Bureau (WCIRB) is the independent bureau that sets classifications and rules for Workers’ Compensation carriers in California. They have proposed some changes to the handling of claims and payroll relating to COVID-19 that could have a BIG impact on the work comp premiums you pay this year and into the future. It is crucial that you keep excellent, detailed records now so that you can take advantage of these changes, if approved.

Proposed Rule Changes

On April 20th the WCRIB issued a special regulatory filing to the California Insurance Commissioner, to address some issues that would help employers through the COVID-19 crisis. A public hearing will be held in May 2020, and if approved by the Insurance Commissioner, the rule changes will need to be communicated and enacted by every carrier in the State of California – retroactively.

1) Exclude COVID-19 related claims from experience rating

Current Rule:  All employers with premiums in excess of $25,000 are given an Experience Modifier that includes all approved claims for workplace injuries or illness under the premise that past experience compared to expected loss is a predictor of future loss. The Experience Modifier can increase or decrease the premium that would otherwise be paid

Proposed Rule: Claims that are due to a diagnosis of COVID-19 are to be excluded from the employer’s experience modification calculations. For a claim to be excluded, the accident date must be on or after December 1, 2019. Employers will need to double check that carriers report the claim on the Unit Statistical Report with Catastrophe #12 to be excluded.

2) Re-Classification of Employees to Clerical Classifications

Current rule: Employers may only reassign an employee whose job duties have permanently changed to a different classification.  Temporary or partial year reassignments are not allowed.  They may also not divide classifications between clerical and another classification for a single employee unless permanently reassigned. This rule limits the ability of employers to use the 8810 classification for employees during the Stay at Home Order, though their exposure may be primarily clerical while temporarily working at home.

Proposed Rule:   Effective March 19, 2020 (start date for the Stay at Home Order) and for up to sixty days after the Stay at Home Order is lifted, employers may reassign other classifications to the clerical classification 8810 – if employees are only performing clerical duties during the stay at home order. This does not apply if an employee’s normal classification is clerical.  This would be considered a temporary reassignment and employees must be assigned back to a non-8810 classification once normal job duties have resumed. An employer may only reassign an employee one time during the rule change time period. Employers must maintain adequate records to determine the employee was only performing clerical duties during this time and be able to segregate their payroll.

3) Exclusion of Payroll to Non-Working Employees

Current Rule:  Worker’s Compensation includes non-working payroll, such as sick pay, vacation pay, family leave, or bonus in calculation of premium.

Proposed Rule: Exclude payroll of workers that are not working but still getting paid (including paid leave under FFCRA).  This rule would take effect on the date of the governor’s order (3/19/2020) and up to 30 days after the order is lifted or the employee is back at work. Employers will need to keep records showing that these employees were performing NO work and were not expected to work during the period covered by the excluded payroll.

More News – Presumption Ruling

The governor is planning to sign an executive order that would presume COVID-19 illness claims for essential workers were contracted in the course and scope of their job.  This means they would receive Workers’ Compensation benefits without having to prove they contracted the illness in the arising out of or in the course of their employment.  This is estimated to add between $2.2 billion – $33.6 billion to the claims expenses incurred by carriers and even if excluded from experience rating (per proposed rule change #1 above) will eventually increase WC rates.  The major portion of that cost estimate are attributable  to Class 1 Essential workers – frontline medical personnel and first responders. 

For daily updates on these changes visit WCRIB California Filings and Plans.

State Compensation Insurance Fund has already stated in its Additional Support for Policyholders and Workers that they are accepting claims by essential workers who have a confirmed positive test without making them prove it was contracted in the course of employment.

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References

COVID-19 and Workers’ Compensation – What Employers Need to Know (WCRIB)

State Compensation Fund Supports California During COVID-19 Crisis 

About the Author

  • Founded in 1984 as a subsidiary of the California Association of Nonprofits (CalNonprofits), CalNonprofits Insurance Services was established during a time of diminishing insurance options for nonprofits. One of the driving reasons for establishing the association was to use the collective influence of the sector to secure more stable and quality insurance. We have developed, and are known for, our wide spectrum of services reflecting expertise in both the insurance and nonprofit sectors, our superior customer service, and our development of exclusive insurance products, including a highly successful dental and vision trust. We insure more than 1,200 nonprofit organizations throughout California and we are the only California brokerage specializing in insurance for nonprofits. Our clients range from newly established nonprofits all the way to venerable organizations with multiple locations statewide.

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