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Workers’ Compensation Payroll Classification Rulings During COVID-19

By September 2, 2020September 29th, 2020No Comments

As recommended by Eastern Alliance

There are several premium audit considerations for PA businesses to be aware of for the period of 3/1/20 – 12/31/20. These dates may change to an earlier or later date as circumstances warrant. But the most important aspect is that separate, accurate, verifiable records must be maintained.

Standard Exception Classifications
An employee’s job duties may be temporarily reclassified to Code 953 – Clerical Office Employees during any emergency orders, laws or regulations issued due to COVID–19.

Changing Classifications
When the temporary interruption or suspension of normal business activities caused by COVID-19 results in a change in business operations, an employer may be temporarily reassigned to an alternate classification.

Exclusions from Remuneration
Payments made by an employer or any public governmental entity to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws or regulations, issued due to the COVID-19 pandemic may be excluded. However, any appropriated funds or loans received by an employer as authorized by any law or regulation, or public governmental entity, that are used by an employer specifically to retain or hire working employees are not excluded.

“Paid furloughed employees” means employees who continue to receive payments during a temporary layoff or an involuntary leave and are not performing any work duties for an employer.

Payments to paid furloughed employees will be assigned to Code 1212 (PA). Payments to paid furloughed employees made in accordance with this Rule V.F.10 are excluded from the premium, experience rating and merit rating calculations only if the employer keeps separate, accurate, and verifiable records.

Take note:

  • Any appropriated funds or loans (example PPP or Cares Act) received by an employer as authorized by any law or regulation or public governmental entity that are used to retain or hire employees are not excluded.
  • Wages for “Idle time” do not include paid furloughed employees assigned to normal classification.

 

Below are questions that the auditor may ask each insured/business during the regular audit review:

  1. Was your business deemed essential or non-essential by the appropriate authority?
  2. Did your business operations “cease” due to COVID-19? If so, what date did they cease? What date did you resume?
  3. Did you continue to pay workers? Who were not working at all? If yes, please show these wages separate from the balance of the employee’s wages.
    • Include wages on audit billing summary
      • Class Code 1212 PA or DE
      • Class Code 0012 in all other states NJ &/or NCCI states
  4. Do you have employees that continue to work but are now working exclusively from home?
    • If yes, please show these wages in a different column/category and provide the date of this change.
      • PA/DE Clerical 953
      • NJ or NCCI State Clerical 8810, Telecommuter 8871
  5. Have any of your employees performed duties which are outside the work they performed prior to COVID-19?
  6. Has your business implemented the use of any employees to conduct delivery of goods/services that they did not previously perform prior to COVID-19?
  7. Has your business made any changes to the items that are produced?

 

Some key definitions/codes:

  • COVID-19: a mild to severe respiratory illness caused by a coronavirus.
  • Furloughed Employees: employees that are placed in temporary status without duties and without pay due to a financial emergency necessitating budget restrictions.
  • Paid Furloughed Employees: employees who continue to receive payment during a temporary layoff or an involuntary leave and are not performing any work duties for an employer.
  • Payroll will not be included in experience mods or merit rating. (Payroll will be captured in code 1212 or 0012.)
  • Claims will be given catastrophe code “12” to capture coronavirus claims and exclude them from rating calculations.

 

Again, record keeping by the insured is the key to the best possible outcome.