Update to Handling Worker’s Compensation Payroll During COVID-19

The Pennsylvania Compensation Rating Bureau, along with many other state or national regulatory bureaus, are starting to release guidance or new rules on the proper handling of workers’ compensation payroll during the COVID-19 pandemic.  In many instances, employees are working in different payroll classifications than they normally would, working from home performing different tasks, or not working at all while still being paid.  This Horst Insurance Client Alert provides guidance on how you should be tracking payrolls during the COVID-19 disruption.

  • Employees Continuing to Work, but Performing Different Duties – For employees who continue to work but have taken on different duties normally assigned to a different workers’ compensation classifications, employers should maintain payroll records in a manner that allows the payroll to be identified and split based on the applicable workers’ compensation class code.  In Pennsylvania, a temporary interruption of normal business activities that results in a change of business operations may allow an employer to be assigned to an alternate classification.
  • Employees Working Remotely – For remote employees who continue to perform their normal duties, employers should continue to maintain payroll records and classify this payroll as usual by the employee’s normal class code.  For remote employees performing different tasks than normal, or performing tasks that would fall under multiple workers’ compensation class codes, employers should maintain payroll records in a manner that allows the payroll to be identified and split based on the applicable class codes.  In Pennsylvania, a “Coronavirus Exception” has been created to allow for the temporary reclassification of payroll for employees working from home to Code 953 – Clerical Office during COVID-19 restrictions.
  • Employees Not Working While Being Paid – For employees who are furloughed but still being paid, employers should maintain a separate payroll category so this payroll can be easily identified and assigned to new class codes being developed in response to COVID-19. In Pennsylvania, payroll for furloughed employees as a result of orders or emergency laws related to COVID-19 will not be included as employee remuneration.  “Idle workers”, or those who are not working for other business reasons, are not considered furloughed employees.

Pennsylvania has also created a new Coronavirus “Catastrophe Code 12” for all COVID-19 related workers’ compensation claims.  These claims will not be included in experience modification calculations.  Payroll paid to furloughed employees will also be tracked under a new “Statistical Code 1212” which will also be excluded from future experience modification calculations.  These Pennsylvania changes will apply to policies in force on March 1, 2020 through December 31, 2020.

The various state and national workers’ compensation systems recognize the unique circumstances being created by the COVID-19 pandemic and appear to be taking steps to recognize the impact on payrolls and job classifications that are occurring.  Careful documentation of your payroll to reflect altered job assignments, whether onsite or remote, and payroll amounts for employees not working, will ensure that you can take full advantage of the relief that is being programmed into the workers’ compensation system.

Please reach out to your Horst Insurance Account Executive at 800-533-2011 with any questions.