Insurance Commissioner Adopts Emergency Regulations Excluding COVID-19 Claims From Experience Modification Rate
On June 17, 2020, Insurance Commissioner Ricardo Lara issued an Order which will result in workers’ compensation premium savings for California businesses affected by COVID-19. The Order adopts new regulations which require insurance companies to recompute premium charges for policyholders. “California’s business owners have been hit hard by COVID-19,” said Commissioner Lara and the premiums should reflect that many employees are performing less risky duties. The new regulations should provide some financial relief for employers. The following is a summary of the highlights from the Order.
COVID-19 CLAIMS ARE EXCLUDED FROM THE EMR
While the regulations make several changes, the most important change in the Order relates to the reporting requirements for the employer experience modification rate (EMR). This new regulation excludes claims related to a COVID-19 diagnosis from an employer’s experience modification rating calculations.
EMPLOYERS CAN RECLASSIFY EMPLOYEES DUE TO A CHANGE IN DUTIES
During the statewide stay-at-home order, employers can reclassify employees as Clerical Office Employees (Classification 8810) if the employee’s job duties meet the definition of a Clerical Office Employee due to increased work at home. This reclassification will reduce the employer’s premiums for employees who are at a lower risk because they are now working from home. The change is retroactive to March 19, 2020 and concludes 60 days after the Order is lifted. This does not apply to the payroll employees whose payroll is otherwise assignable to a standard classification that specifically includes Clerical Office Employees.
EXCLUDES PAYMENTS TO EMPLOYEES BEING PAID BUT NOT WORKING
The regulations exclude payments made to an employee, including emergency paid sick leave or extended family and medical leave, while the employee is not performing duties of any kind for the employer. This change lowers the employer’s rate by reducing the amount of payroll assessed, and the employer will not pay premiums for furloughed workers who are still being paid. This exclusion will apply during the time California’s statewide stay-at-home Order is in place, and for 30 days thereafter, if the employee continues to not work.