On April 17, we sent you an email alert about the Workers’ Compensation Insurance Rating Bureau’s (“WCIRB”) proposed regulatory changes to payroll reporting and the classification of payroll and claims. The changes included allowing the Clerical Office classification to be used for many employees who are now working from home, excluding COVID-19 workers’ compensation claims from experience modification calculations, and excluding from payroll the amounts paid to employees who are not performing any work. The proposed rule changes were amended and have now been submitted to Insurance Commissioner Ricardo Lara for approval.
The Clerical Office Classification rule would apply to employees working remotely as long as they were not assigned to a classification that already specifically included Clerical Office Employees. This rule will last from the date of the California statewide stay-at-home order until sixty (60) days after that order is lifted. A single employee’s payroll may be divided between the Clerical Office classification and another classification only once during this time period. Once the employee’s duties are no longer exclusively clerical in nature, the Clerical Office classification would no longer apply. Employers must maintain records that document the change in duties. However, WCIRB Committee and staff members have noted that employer communications explaining the actions would likely be acceptable. Auditors should also be flexible in accepting documentation.
For COVID-19 claims, the initial proposed rule stated that claims with a diagnosis of COVID-19 would be excluded from the experience modification. The proposed rule now excludes claims “directly arising from” a diagnosis of COVID-19. The change may have been in response to a concern by carriers that a non-COVID-19 work injury claim could be excluded from an experience modification if that claim also included, or was amended to include, a COVID-19 injury claim. But with this change, there is now concern that a COVID-19 claim could be included in the experience modification if an employee being treated for a work injury is infected with COVID-19 as result of being exposed during treatment. This has been referred to as a compensable consequence claim. Accordingly, employers and brokers should monitor all claims to make sure they are correctly coded and reported.
The proposed rules continue to exclude from payroll payments made to an employee while the employee is performing no duties of any kind in service of the employer. This will apply from the date of the California statewide stay-at-home order until thirty (30) days after that order is lifted. However, the excluded amounts can be no greater than the employee’s regular rate of pay. In order to benefit from this proposed rule, employers must maintain records that segregate the payments made to an employee who is not performing work for the employer.
The proposed WCIRB rule changes should reduce premium costs.
The pandemic has also triggered debate about the possibility of a new telecommuting classification, which exists in other states. Carriers may not be opposed to the creation of this classification in California, as some have had positive experiences with the classification in other states. Such a change, however, would require a separate WCIRB rulemaking filing. As to the proposed changes discussed above, the California Department of Insurance will hold a public hearing by telephone on May 18, 2020 to consider them.
RPNA continues to monitor developments affecting workers’ compensation premium that may benefit our family of clients. If you believe you may benefit from the proposed changes listed above, feel free to contact us to discuss how we may be able to assist you or ask your Broker.
Please contact Nicholas Roxborough at (818) 992-9999, ext. 222, or David Ginsburg, at ext. 228.
In the meantime, we hope you are healthy and staying safe.
Click here for the link to the WCIRB’s description of the proposed changes.