Good News for Business Owners that continued to pay furloughed employees due to COVID-19

New Statistical Workers’ Compensation Code is Positive News for Employers

Good news for business owners with furloughed employees. If your business suspended operations due to COVID-19 (Coronavirus), but continued to pay employees who are at home but not working, you will not have to include the payroll paid to these employees in the calculation of your workers’ compensation premium. A worker’s comp premium is based upon payroll. However, the National Council on Compensation Insurance (NCCI) and the Division of Insurance recognized the extraordinary circumstances around COVID 19 and expedited a rule change. The rule change addresses the question of payroll for employees who are being paid, but are not working as it relates to the basis of premium.

The approved new statistical code for employers that paid furloughed employees due to Covid 19 is  0012 with a rate of 0 (zero).  This new statistical code is time sensitive and requires the employer to notify the workers compensation carrier within certain parameters. Under the new code, “paid furloughed employees” is defined as employees who continue to receive payments during a temporary layoff or an involuntary leave and are not performing any work duties for an employer.

An employer making payments to paid furloughed workers must provide to their workers’ compensation carrier, within the later of 60 days of approval date of this rule or 25 days after the employer begins making payments, separate, accurate and verifiable records that include:

• a list of all paid furloughed employees,
• their normal workers compensation classification,
• their weekly wage
• their furloughed date
• their anticipated date of return to work.

What Classification is Assigned if Separate Records Have Not Been Kept by the Employer?

If separate, accurate, and verifiable entries within the employer’s payroll records are not
maintained, payroll is assigned to the classification for work normally performed by the employee prior
to the COVID-19 (coronavirus) pandemic.

What if an Employee is Asked to Perform Work?

If an employee is requested to perform any duties for an employer, the employee is not deemed a paid
furloughed employee for any period of time they are performing duties for the employer. If the
employee is not deemed a paid furloughed employee, payroll must be assigned to the classification
applicable to the work being performed in accordance with Rule IV-A.

What are the Effective and Expiration Dates of the New Rule?

This Rule V-G-7 is effective March 1, 2020. The expiration date of this rule will be December 31, 2020,
which may be amended to an earlier or later date as circumstances warrant in consultation with state
regulatory authorities.

Where Can I Find a Copy of the New Rule?

The newly issued guidance is contained in Part 1 Rule 5 sub-rule 7 of the Workers Compensation and Employers Liability Insurance Manual.

Jeff Eddinger, senior division executive, Regulatory Business Management, for NCCI told the Insurance Journal “The rule change is going to basically take the payroll for that period of time where the worker’s furloughed and remove it from the calculation.”

The National Council on Compensation Insurance (NCCI) has a COVID Resource Center on its website that includes answers to frequently asked questions and a new analysis of the economic impact of coronavirus on the workers’ compensation industry.

For more information, or if you have questions about worker’s compensation, business insurance or employer liability, contact a member of our experienced Commercial Lines Division by calling (844) 501-1359 or requesting a complimentary insurance insurance quote here.

Since 1964, McSweeney & Ricci Insurance has provided complete insurance solutions and trusted advice to individuals, families and businesses throughout Massachusetts and the New England States. For home insurance, auto insurance, business insurance or life insurance, contact us today.


The Insurance 4/20/20

“Employers May Exclude Payroll to Employees Not Working for Workers’ Comp: NCCI” by Andrew Simpson




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