California Employers May See Premium Exposure Reduced Amid WCIRB’s Emergency Regulatory Changes

The Workers’ Compensation Insurance Rating Bureau (WCIRB) is making an effort to address concerns on growing uncertainty regarding Workers’ Compensation premiums and how Covid-19-related claims will impact employers.

Employers everywhere have had to change the way they do business. Some employers have been able to remain operational while others have had to halt activity entirely. Following a flurry of emergency meetings this week, the WCIRB’s Governing Committee has put forth and approved proposed regulatory changes in response to this unprecedented pandemic.

The proposed changes will impact how Covid-19 claims affect all California employers’ future Ex-Mod calculations. Those employers who have kept employees on payroll may benefit from the changes in how that payroll will be calculated during the State’s stay-at-home order.

The following regulatory changes will be submitted to Insurance Commissioner Ricardo Lara and the Department of Insurance by early next week for approval:

  • The exclusion from an employer’s experience modification (ex-mod) calculation of all claims as a direct result of a Covid-19 diagnosis (would apply to claims with a date of injury after December 1, 2019).
  • For employers who continue to issue payments (including sick or family leave benefits) to employees while they remain off work/ perform no duties of any kind in service of the employer, these payments shall be excluded from the premium calculation. These excluded amounts shall be no greater than the employee’s regular rate of pay (excluded payroll is the period effective as of the California stay-at-home order and concludes 30 days after the order is lifted).
  • For employers with employees doing alternate work that would meet the definition of a clerical office employee, their payroll can be temporarily reclassified to the clerical class code (8810) for premium calculations. The payroll eligible for reclassification would be for the period effective as of the California statewide stay-at-home order and concludes when the employee returns to their regular duties—or 60 days after the order is lifted, whichever occurs first.

All California employers will benefit from Covid-19 claims being excluded from their ex-mod calculation. Employers who had employees on furlough—or paid leave of some kind—and employers who remained in operation via telecommuting or work from home options may also benefit from a reduced premium exposure.

If you fall into any of these categories, it’s time to start taking a closer look at your recordkeeping. Put together a timeline of when your operations pivoted, when and which of your employees switched into a potentially clerical position. Document and log any notices to employees about the changes to provide support as to when you may be able to take credit for any class code changes or payroll exclusions.

All of this will be important as auditors will be asking for verification to support reclassifying this payroll.

We will continue to actively monitor these proposed changes as they develop.  If you have questions on whether or not you may qualify under the proposed guidelines or what information to document, please feel free to contact me for more information.

 

 


Kevin Mui

About Kevin Mui

Kevin Mui has been working in the insurance field for the past decade specializing in Workers’ Compensation and risk management across multiple industries. He mitigates the costs of potential and existing claims with preventative risk management techniques, and provides ongoing claims advocacy for his clients. Kevin has a background in financial advising and obtained his Life & Health license, along with the Series 6 and 63 securities licensing. He graduated from the University of California, Riverside with a Bachelor’s of Science in Business Administration.

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