Workers Comp Class Code for Employees Furloughed due to COVID-19
You may have heard about a new workers’ comp class code for employees furloughed due to the COVID-19 pandemic. The code offers a prime opportunity for qualifying employers to save money on MA workers’ comp. But there is a time-sensitive element to it…
To help translate the WCRIBMA guidelines and help you prepare for audit, we’ve summarized our clients’ most common questions on this issue:
What is the new workers comp class code for furloughed employees?
Code 0012 is a statistical code newly approved by the Massachusetts Division of Insurance (DOI). Unlike other class codes, which all come with a dollar-amount rate per $100 of payroll, code 0012 has a rate of $0.00 (zero). Companies would be wise to leverage this code wherever possible, because any payroll assigned to 0012 is not included in the premium calculations for your workers comp. That equals savings.
My business continued to pay employees who were furloughed (or given a temporary layoff) this year. Can we use class code 0012?
Yes. Payments to furloughed employees who perform “absolutely no work” for you, and aren’t on site during this period, can be assigned to Code 0012. Payments made in accordance with MA Manual Rule V-G-7 are excluded from your premium and your experience rating calculations, so long as you maintain “separate, accurate, and verifiable entries” within your payroll records.
What if we didn’t keep separate records?
If “separate, accurate, and verifiable entries” were not kept, unfortunately, your payroll will be assigned to the class of work normally performed by the employee, prior to any emergency orders.
What is the official definition of “furloughed” in this case?
The WCRIBMA defines furloughed as, “any employee who continues to receive payment during a temporary layoff or an involuntary leave, and is not performing any work duties for an employer.”
What about employees working from home? Does that count as furloughed?
No. According to the WCRIBMA, if an employee has been designated to work from home, and his duties become clerical, his payroll during the pandemic period can be allocated to Code 8810 – “Clerical Office.” (As long as you keep those separate records for each employee affected.)
A single employee’s payroll may be divided between Classification 8810 and another classification only once during this time period. Once the employee’s duties are no longer exclusively clerical in nature, Classification 8810 won’t be assigned.
What documentation is needed in order to leverage class code 0012?
Strictly speaking, according to the WCRIBMA, employers making payments to furloughed workers must alert their workers’ comp carrier within 60 days of the rule’s approval (7/10/2020), or within 25 days of the first payment to those employees–whichever is later. You must also provide a list of all furloughed employees, the employees’ normal workers’ compensation classification, weekly wage, furloughed date, and anticipated date of return to work.
This means most companies need to communicate with their carrier by early September (or later, if you furlough employees later this year).
I still have questions. Can you help me with the workers comp class code for furloughed employees?
Absolutely. Just give us a call: 508.339.2951. We recently worked with a new client on their annual audit, and were able to leverage the 0012 class code for a variety of employees–saving $25K on their workers’ comp premium. Although the stated definition draws a line between “furloughed” and telecommuting, our experience has shown some wiggle room for interpretation. Exactly who fits the bill may be up to the auditor’s discretion and/or the carrier’s discretion, especially when your insurance agent can build a good case for the applicability of this new code.