June 2020: This article is the first in a planned series on types of remuneration (payments and goods given to workers) and how they affect the premium on your workers' compensation policy.
The pandemic has impacted every business in the country. Your payroll may have increased or decreased. You may be paying your workers for different reasons now, also. How does this change your policy's premium? What record-keeping is now required so that you can take advantage of the new types of payroll that you may pay?
As the Monty Python cast would agree, nobody expects a global pandemic. The shutdowns that Florida experienced have likely impacted your own company. Let's go over three common questions that may affect you.
I've laid some people off and paid them severance. How is that classified?
Severance pay can fall into one of two categories. If you are paying an employee for work they already did or for vacation that they already earned, then the pay is included in your premium calculation. However, if you give a bonus to a worker at dismissal, the pay is not included in your premium calculation. Just make sure that you note your payroll records so that you'll remember the circumstances when it comes time for your audit.
I've kept some workers, but I am paying them for time that they are not working. How do I handle this?
You may be paying workers even though they're not working at all. You may also have some workers who aren't able to work their full schedules, and you're supplementing their pay. These two circumstances are handled in two different ways.
First, if a worker is not doing any work for you, payments you give them are considered "payments to paid furloughed employees," according to the National Council on Compensation Insurance (NCCI). These payments are not included in your premium calculation, unless they are payments given to the employer as funds or loans to retain or hire working employees. You will keep up with these payments under a new class code: 0012, Paid Furloughed Employees. For instance, let’s say your employee Maria usually cooks in your restaurant’s kitchen. If you sent her home because you have no work for her, but you are continuing to pay her because you want to keep her as an employee, then your payments to Maria are “payments to a paid furloughed employee.”
Second, if a worker IS doing some work for you, but you are supplementing their pay with additional payments, the extra pay is called "Idle Time" pay. It is included in your premium calculation. This pay is treated just like your normal pay, and you do not have to record it separately for workers' compensation purposes. Here’s another example: normally Joe has 8 hours of work each day, mowing lawns for your maintenance company. Because many of your customers have reduced their contracts, you only have 6 hours of work for Joe each day. If you choose to keep paying Joe for 8 hours each day, then 6 hours would be classified as normal work and 2 hours would be “Idle Time.”
For either type of payments, please notify us so that we can make sure that your premium payments are accurate during the policy period.
I am on a pay-as-you-go payment plan, where I report payroll for each of my class codes. Now some of my workers are doing a different type of work. How do I classify them?
If you have employees who are temporarily working from home, you can usually report their pay during their work-from-home period under a clerical code, like 8810. Let us help you to review your class codes and make sure that the correct code is available for your report each month!
If you have any questions about the above, don't hesitate to give us a call. We will be glad to talk with you and explain these items at more length.
Definitions
Paid furloughed employees: Workers who are not doing any work but are being paid.
Code 0012: The class code used for payments made to paid furloughed workers.
Idle time: Pay given for non-work time to a worker who is working a partial schedule. Idle time is handled the same as normal payments.
See Also