Payroll Allocation Guidance for Workers’ Compensation
Update, Published 6/2/23
As of June 30, 2023 Statistical Code 0012 for Paid Furloughed Employees will expire.
The National Council on Compensation Insurance (NCCI) proposed two workers compensation countrywide filings on February 1, 2023, Item B-1447 and Item E-1410. The filings propose an expiration date of June 30, 2023, for the special treatment of COVID-19 (coronavirus) reporting rules and claims:
NCCI Item B-1447
NCCI Item B-1447 establishes an expiration date of June 30, 2023, for:
- Statistical Code 0012—Paid Furloughed Employees
- The exclusion of payments to paid furloughed employees during federal, state, and/or local emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic from premium and experience rating calculations
- The final premium reporting rule exception for the COVID-19 (coronavirus) pandemic in NCCI’s Statistical Plan
NCCI Item E-1410
NCCI Item E-1410 proposes an expiration date of June 30, 2023, for the special treatment of COVID-19 (coronavirus) reporting and claims.
Item E-1410 proposes revisions to the rules to:
- Establish an end Accident Date of June 30, 2023, to Extraordinary Loss Event (ELE) Catastrophe Number 12 for the reporting of claims attributable to COVID-19 (coronavirus)
- Include claims attributable to COVID-19 (coronavirus) with Accident Dates on and after July 1, 2023, in experience rating calculations, except in Illinois, and merit rating plans (where applicable)
- Report COVID-19 (coronavirus) claims to ELE Catastrophe Number 12 only if these claims have Accident Dates between December 1, 2019, and June 30, 2023
- Exclude COVID-19 (coronavirus) claims from experience rating calculations and merit rating plans (where applicable) only when these claims have Accident Dates between December 1, 2019, and June 30, 2023, and are reported with ELE Catastrophe Number 12
WCRB
On May 11, 2023 the Wisconsin Compensation Rating Bureau (WCRB) issued Circular Letter 3251 regarding NCCI Item E-1410 – Revisions to NCCI Manual Rules Related to the Inclusion of COVID-19 (Coronavirus) Claims in Experience Rating and Merit Rating.
The letter reads:
Pursuant to ch. 626, Wis. Stat., the Office of the Commissioner of Insurance has approved the following changes adopted by the Governing Board. The Extraordinary Loss Event (ELE) Catastrophe Number 12 for reporting of COVID-19 claims expires as of June 30, 2023.
If you have questions about proper classification and recording of furloughed employees for workers’ compensation, please reach out to your M3 account team or to WCRB directly.
Published 6/22/20
As of 6/19/20, stat code 0012 for Paid Furloughed Workers is still to be used where applicable.
The WCRB continues to monitor the impact of COVID-19 prevention measures on industries and employment in the state of Wisconsin and will provide ongoing updates as the situation develops.
Published 5/19/20
The Wisconsin Compensation Rating Bureau (WCRB) released a circular letter on Friday, May 15th to clarify the use of class code 0012 after Emergency Order #28 was declared unconstitutional. The letter reads:
Based on the decision of the Wisconsin Supreme Court in Wisconsin Legislature v. Andrea Palm, 2020 WI 42 (2020), Emergency Order # 28 has been declared unconstitutional. However, this ruling does not impact Governor Evers Executive Order #72 proclaiming that a public health emergency exists. As such, a governmental emergency order impacting employment in the state of Wisconsin is still in place and stat code 0012 – Paid Furloughed Workers is still to be used where applicable.
The information originally published by M3 on April 2nd (below), regarding Rule V.H.7 and stat code 0012 as it pertains to Wisconsin’s emergency order has not changed.
ORIGINAL POST, Published 4/2/20
On March 30, 2020, the Wisconsin Compensation Rating Bureau issued Circular Letter 3209, which added Rule V.H.7 to the Wisconsin Basic Manual. The rule clarifies guidance regarding wages paid to furloughed employees during a state-wide emergency order, and the effect on workers’ compensation insurance.
Rule V.H.7 states:
“Wages paid to employees who have been furloughed during the time period where a state-wide emergency order issued by a public official, whether or not the employer is exempted from the emergency order, shall be reported at audit under stat code 0012 – Paid Furloughed Workers During A Governmental Emergency Order Impacting Employment. The payroll during the furloughed period is not assigned to a classification code and no premium is calculated. If an employee is requested to perform any duties for their employer during this time period, they are not deemed furloughed while the task is being completed. If the employee is not deemed furloughed, the payroll will be assigned to the classification applicable to the work usually performed. Payroll records must clearly reflect the division of payroll between pre and post emergency declaration.”
Quarantined Workers
As long as an employee is not doing any work for the employer, the fact that they are under quarantine while furloughed makes no difference. The rule still applies to this employee.
Use of Paid Time Off
If an employee chooses to use their paid time off (PTO) hours, this rule does not apply and the typical premium is calculated for this employee. If the employer forgives these PTO hours, and they are not docked from the employee, the employee is considered furloughed and Rule V.H.7 applies to their wages. Again, the employee must not be performing any work for the employer for this rule to apply.
Duration
It is important to note that Rule V.H.7 applies only to paychecks given during the period of the state-wide emergency order. In Wisconsin, Governor Evers’ order became effective on Wednesday, March 25 at 8am CST. Therefore, Rule V.H.7 applies to paychecks from Wisconsin employers starting March 25th until the state-wide emergency order has been lifted.
As an additional resource, the WCRB has created a live FAQ document regarding this rule and other considerations for furloughed employees. The document is fluid and will be updated regularly.
Key Takeaway
Employers should maintain clear records of employee’s regular payroll and furlough payroll in order for Rule V.H.7 to apply. If records are accurate and maintained, and Rule V.H.7 applies, wages paid to furloughed employees during a state-wide emergency order are excluded from the employer’s workers’ compensation insurance basis of premium. As long as employees are not doing any work for the employer during their furlough, even if they are quarantined, the rule applies to paychecks received throughout the duration of the state-wide emergency order.
