CalNonprofits Insurance Services

New COVID-19 Work Comp Rules

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The California Insurance Commissioner approved the proposed rules that we previously reported on our blog April 29th. Now is the time to take action and make sure you have clear and adequate records to take advantage of these new COVID-19 Work Comp rules as they could save your organization money.

New Rules

There are three new rules that will lower your premium if you segregate your payroll and adequately document the changes. All of these rules are retroactive to March 19th – the effective date of the statewide Shelter In Place (SIP) order.

(#1) One-Time Re-Classification of Employee Payroll to Clerical Office Employee Classification 8810

A one-time reclassification of employee payroll from other non-clerical classes to Clerical Office Employee (8810) class code is allowed during the shelter in place (SIP) order until employees resume their normal work duties or 60 days after the statewide SIP order is lifted (whichever is first).  Clerical class codes are usually the least expensive class code on your policy. An employee may be changed once during this time period from their regular classification to the clerical classification.

For example, if you have employees in other classifications, such as Day Care or Outside Salesperson, and they are working from home doing work that fits within the clerical classification, you can temporarily reclassify that payroll from March 19th (or the actual date they changed to clerical duties if later). You may not reclassify payroll for those employees whose standard classification includes clerical. Payroll records must be segregated for reclassified employees, meaning it must be clear which payroll is attributed to the time period covered by the rule change and a list of their duties during that time must be maintained. If they are still doing other non-clerical duties while at home, they cannot be reclassified.

(#2) Employees Being Paid but Not Working May Be Excluded From Basis of Payroll

You may exclude payroll for those employees being paid but NOT performing work for your organization – from March 19th and continuing until up to 30 days after statewide SIP order is lifted (or until regular duties resume). You may also exclude payroll for sick leave and paid family leave. Exclusions can be intermittent, for example, if an employee worked 1 day per week but was paid for 5 days or if an employee worked 2 hours per day but was paid for a full day. If you continued to pay employees while they were not working, you can exclude that payroll from work comp charges. 

You will still need to report the excluded payroll for statistical purposes but that payroll won’t be included in the premium charges.  Your records must segregate the non-working payroll from working payroll and must not be anecdotal or verbal estimates. Additionally, the excluded amounts may not be more than the employee’s normal pay rate.

(#3) Exclude COVID-19 Related Claims From Experience Rating

Claims that are due to a diagnosis of COVID-19 are to be excluded from the experience modification calculations. Claims that are determined to be the result of another workplace injury will not be excluded. For a claim to be excluded, the accident date must be on or after December 1, 2019. You will need to be sure to use the new COVID-19 Injury and Cause of Injury codes when filing claims. It is best practice to double-check that carriers report the claim on the Unit Statistical Report due on or after August 1, 2020, with the new Catastrophe #12 code. If the claim is not reported as a COVID-19 claim, it will not be excluded from the experience rating.

Some carriers will allow the employer to make the payroll changes now and see an immediate change to their premium instead of waiting until the audit, and others are waiting until the audit. You must be able to demonstrate the change of job duties and that they are clerical (for #1), that they were not working (for #2), and claims are reported on the August 2020 Unit Statistical Report with Catastrophe #12 (for #3). 

Contact your account team for further information or if you need assistance!

Reference

July 1, 2020 USRP and ERP Changes Quick Reference Guide

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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