COVID Work Comp Update
There have been a lot of questions posed to carriers and the PCRB regarding what is going to happen at at your work comp audit. In light of COVID and the SBA PPP program many of you may be paying your employees to stay home. As you probably know, if you have received a PPP loan/grant 75% of the money must go to cover payroll costs. Therefore some of you may legitimately have employees that would normally be driving, on your factory floor or doing other work that has been deemed non essential, at home but still on your payroll. In many cases the normal job functions that they are not allowed to do carry a high rate per $100 of payroll. In keeping them at home you are reducing the actual exposure but may still be charged the higher rate. Below is an example.
A school transportation contractor applied for the PPP loan. The contractor’s business is driving students normally they fall in the 0804 Class code of School Bus Operation that carries a rate of $4.00 per hundred dollars of payroll. If they received the money from PPP they would have to pay employees to stay home as there is nowhere for them to drive. So….Why is this a problem? If we are still charging the same high rate for people to stay at home the losses will be better than normal, and therefore could in fact lower rates into the future. The lower rates in the future would not be an accurate depiction of what the true exposure was prior to and after the COVID outbreak.
The other side of that coin is that if something does not change we will have companies paying high rates of premium for people that were required to stay home but remain on payroll. So where does this leave us? The PCRB is weighing a few options and I would imagine we will have more clarity on this in the coming weeks. Some of the considerations are listed below.
- If an employee is being paid to stay at home, you may be allowed to put that payroll into the 0953 clerical class code (rates around 25 cents per hundred dollars of payroll)
- PCRB could create a class code specifically for this virus and could make the new class code have a low or 0 rate. ( many think PA will move in this direction )
- They may treat this like they did TRIA after 9.11 and have you opt in or out of the coverage
There are a number of other options outside of these but these seem to be the most commonly accepted. The problem with any of this would be that at Audit how would an auditor know that a certain percentage should be included under “COVID Stay at Home” payroll. If you are truly paying people to not be in the office, we would encourage you to find a way to track that. For example a payroll provider may be able to create a separate payroll class to put COVID employees under so that at the end of the year that can be shown to the auditor.
We are not sure anything is going to change, right now there is just talk of how to handle it, but we want you to be prepared if something does change. The moral of the story is…If you are paying employees to stay home TRACK THE PAYROLL OF STAY HOME EMPLOYEES! It may be helpful when all this washes out.
Below is a link to a short video we did explaining this very situation. If you have any questions or want to discuss your specific situation please reach out.