There’s likely never been a more difficult time than right now to be a business owner. The pace of change has never been faster.
As the pandemic continues, businesses are adapting to a new normal. Government bailouts, company budgets turned upside down – change is continual and it is more important than ever to keep the records. If you’re not keeping records of changes made, employers could miss out on potential expense reductions. Businesses are laying off and/or furloughing employees. Some employees may have new job roles and duties to stay employed. All of this has an impact on your insurance, specifically workers’ compensation. While we cannot provide advice on what employee changes to make, we do have recommendations on items to document to help reduce workers’ compensation premiums and produce a better audit experience.
Businesses that have suspended operations due to COVID-19 but continue to pay employees who are at home and not working will not have to include the payroll paid to these employees in the calculation of their workers’ compensation premium.
Employers who are not keeping good records of these payments are going to be sunk regardless of the rule change. An auditor is very unlikely to split payroll out without quality records. Also, a company that excludes an employee’s payroll can’t report claims for that employee.
I’m going to outline for you, three scenarios that you might run into. All three prove the importance of keeping records:
Scenario 1: Paying employees not to work
The various financial assistance programs have different requirements. For example, the PPP has a requirement to maintain your workforce at a certain percentage. If documented properly part of the loan can be forgiven. Paying employees to stay at home and not work creates a sort of conundrum. Should an insurance auditor include that payroll in workers’ compensation and charge for it as if the employee was working? We think not — and the National Council on Compensation Insurance (NCCI) shares the same view. The NCCI created a new WC code for this situation. It will be important for employers to create a new category for employee payroll to record the employee and amounts paid to them to not work. The payroll will show on your policy audit, BUT the corresponding WC premium will be a zero.
Scenario 2: Employees that have taken advantage of the emergency FMLA or paid leave
Another set of government assistance is through the eFMLA and paid leave programs. Make sure to record which employees use this program, along with the corresponding pay they receive. Similar to the above, the compensation will show on your policy, but no premium charge applied.
Scenario 3: Employees that have changed job roles or are now working from home
Lastly, employees that change job roles and duties within a company may qualify for a different class code. Likewise, employees that are now working from home may qualify for a more benign class code. i.e. a floor manager who is now working from home. Employers must record this information, and be prepared to work with your auditor at the end of your policy term.
In summary: Keep the records.
