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Tips for Workers’ Compensation Policyholders During COVID-19

September 2, 2020||inBusiness Insurance|business insurance, workers comp, workers compensation insurance

The COVID-19 pandemic has caused many businesses to adjust or reduce their operations. Workers may have transitioned to working from home, having reduced hours, have been furloughed – some with or without pay, or have been laid off.

Maintain Accurate Payroll Records for Proper Workers’ Compensation Insurance Premium

Tips for Workers’ Compensation Policyholders During COVID-19
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With this upheaval, it is essential to maintain accurate payroll records to ensure you are charged the appropriate premium for your Workers’ Compensation coverage. Workers’ Compensation policies are audited at the end of each policy term, and premiums will be adjusted based on your employee payroll and type of work performed over the year.

In particular, make sure your records account for the following:

  • Any changes in payroll, including a reduction in staff or hours.
  • If you have furloughed employees with pay during the business disruption, keep separate payroll records for these employees for the time they continue to be paid and are not working for you. Furloughed payroll will have a reduced or zero rate when calculating the Workers’ Compensation premium, depending on state Workers’ Compensation rules.
  • If you have furloughed workers within the state of Massachusetts, Massachusetts has the additional requirement below:
    • An employer who is making payments to paid furloughed workers must provide to their workers’ compensation carrier, within the later 60 days of the approval date of this rule or 25 days after the employer begins making payments to paid furloughed workers, a list of all paid furloughed employees, which shall also include the employee’s average workers’ compensation classification, weekly wage, furloughed date, and anticipated date of return to work.

Tips for a Change in Operations

Many businesses cannot run their typical operations because of their states’ response to COVID-19, and instead of closing, they may adapt their operations to maintain a flow of income. Other businesses have changed their operations to help respond to the pandemic by providing essential products. For example, many distillers have adjusted their operations to distill spirits and manufacture hand sanitizer to help with the shortage. If your business has had a material change in operations during COVID-19:
  • Contact your insurance agent to see if this change in operations could impact how your Workers’ Compensation policy is priced.
  • Note changes in your employees’ roles as part of your payroll reporting, as they may be assigned to a different class code. Are employees engaging in work that is materially different from their prior role?

Maintain Workers’ Compensation Coverage

If you’ve made the difficult decision to lay off all employees during this time, it is essential to maintain Workers’ Compensation coverage so you are protected when your business resumes operations. Maintaining accurate payroll records will ensure your premiums reflect your reduced business operations and staff during this period. More importantly, if you cancel your policy, you may find purchasing a new one difficult or more costly when you resume operations as insurance carriers evaluate new customers on several factors, including whether the business has had continuous prior coverage.

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