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The slow reawakening of the labor market after a winter hibernation. That’s how economists characterized the just-out February jobs report, which reflected an unexpectedly large improvement over January and was the strongest showing since October.
Of course, we don’t have to tell you the news isn’t all rosy. As of this writing, there were still about 9.5 million fewer jobs in the economy compared to a year earlier.
For employers who were forced to furlough employees due to the COVID-19 pandemic, the welcome news is that you can still save money on your workers’ compensation premiums thanks to the addition of a new classification code.
We’ve prepared the following Q&A to help you understand whether and how this code can save you money.
What prompted the creation of the new workers’ compensation class code?
Code 0012 was created by the rating team at the National Council on Compensation Insurance, which recognized that many good-hearted employers were still paying employees full salaries and benefits despite furloughing them during the pandemic. Thus, any salaries assigned to 0012 employees are not used in the calculation of your premium and experience ratings. In other words, a bit of relief and savings.
Does this apply to employees furloughed from their jobs and now in new roles?
No. The 0012 classification code can only be used for employees who do absolutely no work for you and are not on site. You’ll want to be sure you maintain “separate, accurate, and verifiable entries” within your payroll records.
What if we didn’t keep separate records?
Unfortunately, your payroll will be assigned to the class of work normally performed by the employee, prior to the pandemic.
What should I do to take advantage of Classification Code 0012?
Let your workers’ comp carrier know. You’ll want to furnish a list of all furloughed employees, the employees’ normal workers’ compensation classification, weekly wage, furloughed date, and anticipated date of return to work.
Note that you’ll want to notify your workers’ compensation carrier 25 days after you begin making payments to paid furloughed workers.
Didn’t Code 0012 expire in December?
In fact, it was set to expire on Dec. 31, 2020. But because the pandemic is ongoing, NCCI submitted a new filing to state regulators removing the expiration date. If approved in your state, the code will remain in place until circumstances warrant, meaning, in all likelihood, after the pandemic ends.
How do I know whether my state has adopted the NCCI’s rule?
The NCCI oversees workers’ compensation rates and rules in 36 member states. There are also 11 independent states that formulate their own rules and rates with respects to workers’ compensation. Contact us to find out what your state has done on this front.
Can you help me sort through a few other things about my company’s workers’ compensation policy?
That’s what we do. Just give us a call or send us an email at the address below and we’ll be happy to answer all of your questions.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the nation. As an employee-owned organization, we’ve been protecting what’s yours since 1915. Contact us at news@mahoneygroup.com or 480-730-4920.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.