Reducing Worker’s Compensations Costs during COVID-19
COVID-19 has brought unprecedented challenges and changes. One such change is with your worker’s compensation insurance. Worker’s compensation insurance rates are based upon employee’s job classifications and the payroll figures for that classification. Now that many of you may be paying furloughed employees, reassigning job duties, and having employees work from home, your worker’s compensation rates may decrease due to changes in the class codes for your employees during COVID-19 restrictions. Let us take a look at how each of these changes may be able to reduce your worker’s compensation costs.
If you have paid furloughed workers, either out of your own pocket or with funds from the Payroll Protection Program, you will be able to use a special class code being created just for the payroll during the furlough. The Indiana Compensation Rating Bureau organization is asking approval for a new rate classification for furloughed employees that are not engaged in actually working. If approved, there will be no premium charge for that portion of your payroll while they fit into that classification.
In addition, if an employee is performing a job that is significantly different than his normal work duties were before COVID-19 restrictions, he or she may be placed into a different worker’s comp classification for auditing purposes. Usually, the temporary classification will have a lower rate which will lower your overall cost.
Many of your employees may now be working from home. This may allow you to place them in a different classification code as well. If you had any type of clerical employee that fell into class code 8810 and they are now working from home, or telecommuting, they will fall into class code 8871 while they are working from home.* This classification code carries a lower rate and should reduce your worker’s compensation costs. If you do not know whether an employee should be placed in class code 8871 during restrictions, you can do so and let your work comp auditor determine if they are in the correct class code. We are always here to help you at audit time should you need us.
*This does not apply to church and school clerical employees. Contact us if you have any questions.
If any of these situations apply to you, it is important that your payroll records reflect it, so the correct information will be available at the time of your premium audit. According to the National Council on Compensation Insurance, 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.
Here is what you need to do now to help lower your workers compensation rates at audit time:
- Track payroll for employees while they have been furloughed.
- Track payroll for employees that have been reassigned to a significantly different work assignment, so their payroll may be allocated to a lower rated classification at audit time.
- Use appropriate job descriptions dates for reassigned employees before, during and after reassignment. Record dates while working at each different job description.
- Track payroll for clerical employees who have been working from home
- Contact us with any questions and utilize our free COVID-19 Payroll Tracker
Insurance can be confusing and sometimes unsettling. At Capitol, we stay at the forefront of insurance education, news, and risk management to provide our partners peace of mind that they have the best coverage for their needs. Contact us, so we can provide that same peace of mind for you.