Recent NCCI Activity that could Impact your Workers' Compensation Cost

Recent NCCI Activity that could Impact your Workers' Compensation Cost

| May 05, 2020
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In response to the global pandemic caused by COVID-19, many employers have been forced to shut down or severely curtail their operations. These actions are typically the result of federal, state, county, or local emergency laws and regulations recently enacted to slow the spread of the virus. For those employers that have chosen to continue to pay their employees during this time, maintaining a payroll with reduced or no income is a huge challenge. Recognizing the tremendous financial impact to businesses, the NCCI* has recently made a revised filing to their manual rules to modify how payrolls are accounted for in this unprecedented time. Below is a brief summary of the key points in the NCCI filing sent to all the states under NCCI jurisdiction and also submitted to independent state bureaus for their consideration.

Key Points:

  • Payments made by employers to paid furloughed employees as a result of the federal, state, or local emergency orders issued due to the COVID-19 pandemic which impact the employers staffing or business are not to be considered as wages for purposes of determining worker compensation premiums.
  • The impact period began on March 1, 2020 and will run until December 31, 2020. It may end sooner or could be extended if needed.
  • If an employer is using certain appropriated funds or loans as authorized by any law or regulation to hire or retain working employees, those dollars will not be excluded from wages.
  • Any employer that may have wages affected by this ruling must be separating that payroll from any other normal payroll calculations during this time. If no separation of payroll exists, then normal payroll codes will be used based on job duties prior to the furlough.
  • If a furloughed employee is requested to perform work duties, their payroll for that time should be allocated to the applicable code.
  • The WC code for this payroll will be classified under 0012. Payrolls under this new classification code will not be captured in the NCCI experience mod calculation.

Please keep in mind that the above is a recap of a filing that was sent by the NCCI to several states. Each state may choose to adopt, change, or reject the filing. We do not currently anticipate any significant opposition. Also some states may have slightly different variations of rules regarding these issues.

Please reach out to The Koch Co. with your questions or possible state specific concerns at 402-861-7000 or ContactKoch@hakco.com

*The National Council on Compensation Insurance (NCCI) is a U.S. insurance rating and data collection bureau specializing in workers' compensation. Operating with a not-for-profit philosophy and owned by its member insurers, NCCI annually collects data covering more than four million workers compensation claims and two million policies. NCCI also computes the experience modification factors used in most states to adjust employers' Workers Compensation insurance premiums, using loss and payroll data reported by the various member insurance companies that are part of NCCI.

For more information about COVID-19 and Workers' Compensation visit the NCCI's COVID-19 Resource Center

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