Worker's Compensation and COVID-19

WORKER'S COMPENSATION AND COVID-19: QUESTIONS AND ANSWERS

With the recent passing of the CARES Act, there are many questions about how this affects the worker's compensation industry. Below is a brief summary of some of the most commonly-asked questions, along with links for further information during this rapidly-changing time.

Q: IS COVID-19 COMPENSABLE UNDER STATE WORKER'S COMPENSATION ACTS?

A: These are being taken on a case-by-case basis. While many worker's compensation laws provide reimbursement for “occupational diseases” that arise in the course of employment, many state statutes exclude “ordinary diseases of life” (which would be viruses such as the flu or cold.) There are certain groups, such as healthcare workers, who have a higher probability for exposure. In those cases, however, there may be uncertainty as to whether the disease is compensable.

To review the latest state-by-state rulings in these cases, please click here: https://www.ncci.com/Articles/Pages/II_LegislativeActivity.aspx 

Q: IF A BUSINESS SUSPENDS OPERATIONS BUT CONTINUES TO PAY EMPLOYEES WHO ARE AT HOME AND NOT WORKING, IS THAT PAYROLL INCLUDED IN THE PREMIUM CALCULATIONS FOR WORKER'S COMPENSATION?

 A: Even though “pandemic” or “coronavirus” is not listed within the manual rules, the existing rules for wages still apply for this type of event. Payroll should be included in the premium calculation.

In accordance with Rule 2-B-1-A in NCCI’s Basic Manual, salaries or wages paid to employees who aren’t working because of the suspension of employer operations could be included. Additionally, Rule 2-F-1 addresses wages for time not worked.

For both rules, these wages would be assigned to the classification for work normally performed by the employee.

Q: IF AN EMPLOYER HAS LIMITED OPERATIONS DUE TO COVID-19, AND SOME EMPLOYEES ARE PLACED IN NEW ROLES DURING THE PANDEMIC, WHAT CLASSIFICATIONS COULD BE ASSIGNED TO THOSE EMPLOYEES?

A: In accordance with Rule 1-A, (with certain exceptions) it’s the business of the employer within a state that is classified not to separate occupations, operations or employments within the business. As such, the classification of the employees working new roles might not change. That said, there are situations where classification change could occur. For example:

-  Employer operations have changed to a different classification

-  The employees occupation for the employer has changed (such as a job promotion) to a different classification that can be applied to the employer’s policy

In accordance with Rules 1-D-3 and 2-G, the employer would then be responsible for keeping separate payroll records for the change in operations or wages earned for an employee with a changed occupation.

Q: WHO IS CONSIDERED A PAID FURLOUGHED EMPLOYEE FOR WORKER’S COMPENSATION INSURANCE PURPOSES?

A: By definition, a paid furloughed employee is one who is still being paid where they have been given a temporary layoff, an involuntary leave, or another change in ordinary working hours for a specified period of time. This is for payments made by the employer during the paid furloughed time under the Governmental Emergency Order, regardless of when it was earned.

Q: IF A PAID FURLOUGHED EMPLOYEE CONTINUES TO BE PAID BY THEIR EMPLOYER, IS THEIR PAYROLL EXCLUDED FROM THE EMPLOYER’S WORKER’S COMPENSATION INSURANCE PREMIUM?

A: If an employer continues to pay furloughed employees their normal wages and the employer keeps separate, accurate and verifiable records, the payroll will not be included for the basis of premium.

Q: WHAT IF AN EMPLOYER DOES NOT HAVE DOCUMENTATION ON THE WORK THAT IS FURLOUGHED VS. WORK THAT IS ACTUALLY BEING DONE?

A: If accurate, verifiable payroll records are not maintained, 100% of the wages are assigned to the employee’s normal classification. Estimated or percentage allocation of payroll is not permitted.

FOR EVEN MORE INFORMATION, PLEASE VISIT: HTTPS://WWW.NCCI.COM/ARTICLES/PAGES/INSIGHTS-CORONAVIRUS-FAQS.ASPX