PMA Perspectives - Employee Classifications, Payroll & Experience Mods

PMA Perspectives_blogPMA Companies launched this series in order to provide straightforward information about the implications of COVID-19 and how PMA Companies is responding. Each installment will feature a PMA Executive or Thought Leader responding to three or four questions posed by our moderator, Derek Hopper, Senior Vice President, Shared Services. The objective is to get to the point quickly without a lot of fluff. We hope this will lead you to have a more robust conversation with your PMA Representative.

This installment of PMA Perspectives features Drew Jones, Executive Vice President, Underwriting, and the topic is Employee Classifications, Payroll, and Experience Modifications.

Derek Hopper (DH): NCCI and state bureaus are beginning to provide guidance about classifications, payroll, and some of the unusual employment circumstances caused by COVID-19. How would you describe their comments thus far?

Drew Jones (DJ): They have identified and are thinking through the implications of different situations which are fairly commonplace. Situations like the suspension of business operations and salary continuation programs for idle employees, the temporary shifting of employees into new roles, a temporary change of operations on the part of the business, and whether employees who are now working from home should be reclassified. It is important to remember that it might take some time to work out all of the mechanics, and approaches might differ across state lines. We are paying very close attention to industry dialogue concerning these issues and urge brokers to do the same.

DH: What advice would you give brokers and employers right now?

DJ: I can’t stress enough the importance of payroll recordkeeping. It is going to take some time before we have complete clarity as to how all of the situations should be treated. In the meantime, employers can save themselves time and effort down the road by maintaining detailed records concerning employees who are idle and being paid, or have changed jobs or work locations, including those who have relocated to other states. In addition, employers who have temporarily shifted their operations to producing a new product or providing a new service should document all of the details about the change. It may seem like extra work, but it could benefit employers during the payroll audit process later on.

DH: What about COVID-19 workers’ compensation claims and experience modifications?

DJ: NCCI is proposing that claims attributed to COVID-19 be excluded from the employer’s experience rating, with the increase in COVID-19 claims payments being reflected in the state’s loss cost filings. The reason for this is pandemics, like natural and man-made catastrophes, are rare and hard to predict. NCCI has indicated that it will file a rule change for consideration by state regulators.

DH: Drew, you have the last word.

DJ: I would like our brokers, agents, and clients to know that we are open for business and fully engaged. Every day, our underwriters are working to solve problems and transact business. I couldn’t be prouder of the way all of our employees have stepped up and continue to deliver solutions in the manner our clients and partners have come to expect.

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