At C3, we work to anticipate unexpected future costs you may incur relative to insurance, and we want to prepare you in the best way possible to eliminate or mitigate the issue. Coronavirus is changing operating procedures and this may impact your next work comp audit.
Below are some important reminders of updates and related information to keep in mind when preparing for an audit.
1. Employee classification adjustments are permissible in the event of the following:
- Employee responsibilities transitioned to 100% clerical in nature.
- Employees are not working due to COVID-19-related reasons, but continue to be paid.
2. A temporary assignment of payroll to Class 8810, Clerical Office is allowable under the following circumstances:
- The employee’s responsibilities fall under the definition of a Clerical Office employee (no exposure to any operative hazard of the business).
- The employee’s pay for the remainder of the policy period is not assignable to a classification that specifically includes Clerical Office Employees.
- Appropriate records are maintained. These records must specify when the change in duties occurred and summarize the wages assignable to Class 8810.
3. Pay for employees who are not working can be excluded from workers compensation.
Payments may be reported in Class 0012 with no rate or premium charge in the event of the following:
- The employee was not actively working in any capacity.
- Excluded amounts do not exceed the employee’s regular payroll.
- Appropriate records are maintained. These records must specify when the change in activity occurred and the wages earned during that period. Compensation including regular pay, sick pay, vacation or family leave can be assigned to a separate earnings category in your payroll system (regardless of the source of the funds), as long as it is paid to an employee who is on paid leave.
The date changes took effect per the following:
California / WCIRB 03/19/2020
NCCI States 03/01/2020
4. Record-keeping is paramount. Whether an employee has been reassigned to clerical job duties or the employee is not working, in order to allow for the reassignment of earnings, you must maintain separate, accurate and verifiable records. The records must identify payroll amounts paid to those employees during this timeframe. Without adequate records, the payroll will be included in the classification assigned for work prior to the COVID-19-related orders.
5. When it comes to COVID-19 payroll, the most important thing to know is that if you paid any employees furlough pay, that can be excluded from workers comp IF they were paid but not working. Those employees must have been at home, but paid. This does not apply for employees who were moved to a lesser job. Key to all of this when it comes to being audited is your records must be verifiable for all employees, and the check dates must be within the applicable timeframe. You must be able to produce these records.
If you have any questions about these updates, contact your C3 Client Manager or Broker.