Coronavirus, Workers’ Compensation and legislative updates

Like everything else the pandemic touches, the regulatory and legislative actions related to COVID-19 are a work in progress and continue to evolve.

Workers’ Compensation

Presumptive coverage

Governors and state legislatures grappling with how best to protect employees, while balancing the interests of businesses, continue to look to emergency adjustments to the workers’ compensation system to deal with COVID-19. The dominant issue is providing presumption of coverage for COVID-19 so that first responders and health care workers and, in some cases, other essential workers, have unimpeded access to workers’ compensation benefits.

Legislation is pending or has passed in several states, but the laws vary significantly. In some states, the presumption is conclusive, scrapping the basic tenet of workers’ comp that employees must prove they were exposed to the virus during the course of their employment. But in others, the presumption is rebuttable. The trend, which dramatically alters the workers’ comp landscape, is so prevalent that the National Council on Compensation Insurance, (NCCI) tracks this information.

States implementing changes include Alaska, Arkansas, California, Florida, Kentucky, Michigan, Minnesota, Missouri, New Hampshire, New Mexico, North Dakota, Utah, Washington, Wisconsin, and Wyoming. States with legislation pending include Illinois, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, and Vermont. Updated status can be found here.

Not surprisingly, the action with the broadest sweep came from California. On May 6, Governor Gavin Newsom issued an Executive Order making it easier for employees to prove that they contracted COVID-19 at work and thus, get workers’ compensation benefits. While the presumption can be disputed if there is evidence the disease was contracted outside of work, the order effectively makes workers’ comp coverage available to all employees who worked outside their homes from March 19 to July 5 and contracted COVID-19 within two weeks of performing on-the-job duties. It is expected to cost between $600 million on the low end and $2 billion if higher estimates come to fruition, according to the WCIRB.

In Illinois, a significant court challenge compelled the Workers’ Compensation Commission to withdraw a sweeping emergency amendment that would have created a rebuttable presumption that when medical personnel, first responders, and essential employees contracted COVID-19, it was work-related. Both houses of the General Assembly recently passed a more limited bill that was a compromise measure that both businesses and workers’ advocates could live with. It provides death benefits for first responders who were presumably infected with COVID-19 on duty between March 9, 2020 and December 31, 2020 and worker’s compensation benefits for essential workers under certain conditions, but gives businesses a path to rebuttal.

The term “COVID-19 first responder or front-line worker” is defined in the bill as “all individuals employed as police, fire personnel, emergency medical technicians, or paramedics; all individuals employed and considered as first responders; all workers for health care providers, including nursing homes and rehabilitation facilities and home care workers, correction officers, and any individuals employed by essential businesses and operations as defined in Executive Order 2020-10 dated March 20, 2020, as long as individuals employed by essential businesses and operations are required by their employment to encounter members of the general public or to work in employment locations of more than 15 employees. For purposes of this subsection only, an employee’s home or place of residence is not a place of employment, except for home care workers.” Further, COVID-19 claims will not count against employers’ experience modification and premiums.

Employers can rebut claims under certain conditions if they can demonstrate the workplace was following current public health guidelines for two weeks before the employee claims to have contracted the virus; can provide proof that the employee was exposed by another source outside of the workplace; or, the employee was working from home for at least 14 days before the injury claim. Documentation will be critical to support rebuttals. The bill is expected to be signed by the Governor.

Employers and insurers are concerned that these presumption policies will increase insurance costs for employers at a time when businesses are already facing significant financial challenges. In Minnesota, the Senate recently passed a bill which creates a coronavirus relief fund with stipulations that such funds will help local government organizations cover workers’ compensation costs related to COVID-19, among other needs generated by the pandemic.

While few states have extended presumption beyond health care workers and first responders, some have issued warnings about the handling of COVID-19 claims. Recently, the Industrial Commission of Arizona issued a policy statement noting “claim denials related to COVID-19, like any claim denial, must be ‘well-grounded in fact’ and ‘warranted by existing law'” or based upon a good faith argument for the extension, modification, or reversal of existing law.

NCCI: Impact of claims on Experience Mod

In mid-May, NCCI posted Item E-1407 which excludes all COVID-19 claims from Experience Mods. In the early days of the crisis, new claim codes were created specifically for COVID-19 infections that were paid under workers’ compensation. This filing serves to exclude those claims from experience rating (and merit rating). This applies to claims with accident dates of December 1, 2019 and later and there is currently no expiration date for this rule.

This rule has been approved by Arizona, Arkansas, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Mississippi, Montana, Nevada, New Hampshire, New Mexico, Oklahoma, South Dakota, Tennessee, Vermont, and West Virginia. Other states are expected to follow suit.

 

Independent states

Pennsylvania

In early May, the Pennsylvania Comp Bureau posted the rules relating to COVID-19, effective 3/1/20 to 12/31/20.

These changes allow for:

  • Temporary reclassification to 953 (Clerical) for employees who are now doing clerical work at home during the crisis.
  • Exclusion of payroll for wages paid to employees who are performing no services to the employer. This payroll will be assigned to Code 1212.
  • Exclusion of COVID-19 claims from Experience Rating.

There was a filing to make changes to the Basic Manual as well as the Statistical Plan.

Delaware

Also in May, Delaware made changes identical to Pennsylvania, effective April 1, 2020.

New York

New York has approved new rules, which differ from other states. According to RC 2512, published 5/1, payroll for employees who are not working at all OR employees who are temporarily reassigned to work at home will have their payroll assigned to the new code 8873. 8873 will carry the same rate as 8810. This means that employees who are being paid to not work WILL have premium applied to them, albeit at the very low 8810 rate.This rule is retroactive to 3/16/20 and applies for 30 days following the lifting of the Stay at Home order.The filing also excludes COVID-19 claims from any future experience rating.

Massachusetts

The Massachusetts Rating Bureau released a statement, “For the time being, we are interpreting Rule V.G. 6 to apply to the COV-19 situation. It states that employees who are not on strike, but are unable to perform their normal duties because of a strike, and they are performing absolutely no work for their employer and are not present on their employer’s premises during this period, such wages shall be assigned to Code 8810 – Clerical Office Employees NOC, provided the facts are clearly disclosed by the employer’s records.”

Minnesota

In Minnesota, the bureau has adopted NCCI’s payroll rules, but has stated that COVID claims WILL BE included on the experience mod.

Michigan

Unlike most states, the Michigan bureau (CAOM) does not file rules on behalf of carriers operating there. The carriers have the option to adopt or not adopt anything. CAOM has approved NCCI’s payroll rules for the Assigned Risk market, but individual carriers will have the option whether to follow this or not.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

FAQ: Coronavirus and the workplace

Q. Can employers ask employees who exhibit symptoms to leave work and stay home?

A. Yes. The CDC states that employees who become ill with symptoms of COVID-19 should leave the workplace. The EEOC Guidance, Pandemic Preparedness in the Workplace and the Americans With Disabilities Act addresses these issues.

Q. What should we do if one of our employees has COVID-19 symptoms or tests positive for COVID-19?

A. “Employers should send the employee home and require them to stay home until they are able to return under CDC guidance. It is important to note that return to work standards and time frames may be different depending on circumstances. Employers should review the CDC’s website for guidance. If an employee tests positive, the employer should also consider notifying other employees who may have been exposed at work, but maintain the confidentiality of the employee who tested positive. A good CDC reference for employers” – East Coast Risk Management

Q. What should we do if one of our employees has had contact with a person with COVD-19 symptoms or someone who has tested positive for COVID-19?

A. “Employers should review the risk categories established by the CDC and develop a response based on that guidance. This CDC guidance ultimately puts employees into a risk category based on symptoms, travel, and level of contact with a symptomatic individual. If there is a risk that the employee’s contact with another person puts them at risk of contracting COVID-19, the employer should send the employee home and require them to stay home until they are able to return under CDC guidance. The CDC risk assessment guidance can be found here.” – East Coast Risk Management

Q. How much information may an employer request when an employee calls in sick to work?

A. The EEOC has issued guidance, Pandemic Preparedness in the Workplace and the Americans With Disabilities Act, that explains during a pandemic, ADA-covered employers may ask such employees if they are experiencing influenza-like symptoms, such as fever or chills and a cough or sore throat. Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA. They may also require the employee to undergo medical testing before returning to work.

Q. When may an employer take the body temperature of employees during the COVID-19 pandemic?

A. While under normal circumstances, measuring an employee’s temperature is considered a medical exam and prohibited under the ADA, employers may now measure employees’ body temperature. However, the practice needs to be consistently applied and employers need to know that some people with COVID-19 do not have a fever, and not all fevers are COVID-19 related. The risks to the worker taking temperature must be evaluated and proper PPE provided to minimize the hazard. OSHA offers guidelines.

Q. What are the most effective cleaning products to sanitize our facility?

A. The Environmental Protection Agency has added nearly 200 registered disinfectants to an online list of cleaning products that can help prevent and reduce the spread of the coronavirus and has made the list sortable, searchable and printable. Employers must also ensure workers are trained on the hazards of the cleaning chemicals used in the workplace and maintain a written program in accordance with OSHA’s Hazard Communication standard (29 CFR 1910.1200) and to provide proper PPE and training, when necessary. If this is a non-typical task for an employee, they must be trained at the time of their first assignment.

Q. When employees return to work, can employers require medical documentation?

A. Yes, however, as a practical matter, doctors and other health care professionals may be too busy to provide such documentation in a timely way. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, or an e-mail to certify that an individual does not have the pandemic virus. A best practice would be to follow CDC guidance and instructions from public health authorities.

Q. Do we need to report a confirmed or suspected case of coronavirus to the CDC or local health department?

A. No, the health care professionals will handle the reporting requirements.

 

Workers’ Comp – experience mod and audit considerations

Q. If a Comp claim is accepted will it go on the experience mod?

A. As it stands, yes. This question came up when Cause of Loss codes were updated this week to include a code for COVID-19. Every injury has a Cause of Loss code. It’s how rating bureaus and other agencies track what types of injuries are happening. Except for the code for claims arising from the 9/11 attacks, none of them have been given special treatment in experience rating.

It is worth noting that it was March 2002 before the rules relating to excluding 9/11 claims were approved. If rules excluding COVID-19 claims are coming, we would expect them well after the outbreak is considered over.

Q. If a business continues to pay non-working employees, will it count on the audit? Also, will the pay employees receive under the newly passed laws for sick time or FMLA benefits count on the audit?

A. Probably so. A few states (Oregon, South Dakota, Kansas) have rules that allow for the exclusion of sick time and vacation pay.

Rule 2.F.2 of the NCCI Basic Manual allows for the reallocation of payroll for KEY employees of construction or stevedoring risks who are paid despite the business being idle. This rule is primarily used when a business goes through a seasonal shutdown but retains a few key employees who may work in the office or may not work at all. Moving their payroll to 8810 is permissible. Per communication with NCCI this week, this rule does NOT apply to any other type of business. Idle time is classified the same as being at work.

Our recommendation: EVERY business in either of these situations should keep a close accounting of the money spent. If the rules change in the future, only those with the appropriate records will be able to take advantage of them.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Ten commandments for a workers’ comp audit

Work Comp Premium Audit

While an IRS audit strikes fear in the hearts of business owners, a Workers’ Compensation premium audit is considered routine. Yet, there is a very good chance that it can result in higher charges, particularly if you are not adequately prepared. Clerical errors, incorrect classifications, and miscalculations often lead to overcharges.

There are two important things to remember about Premium Auditors. First, their objective is to maximize your premium, after all, they work for the insurance company. Second, overworked, they have tight time constraints. The more organized you are and the easier you make the job for the auditor, the more likely you are to have a favorable audit.

Here are ten commandments to keep in mind:

  1. Thou shalt not be unprepared
  2. Thou shalt not forget to be there to answer questions
  3. Thou shalt not answer any questions that are not asked
  4. Thou shalt not forget to review your policies being audited before auditor arrives
  5. Thou shalt not forget to do a payroll breakdown -by class code / by department or by job duties
  6. Thou shalt not forget to separate owners, officers, clerical, outside sales and drivers payrolls; or any other employee[s] that you feel should not be classed to the “governing” class code
  7. Thou shalt not forget to have Certificates of Insurance for subs and independent contractors on hand
  8. Thou shalt not forget to have the definitions of payroll, sales, sub-contract cost, etc. “on hand and reviewed” before auditor arrives
  9. Thou shalt not fail to ask auditor to recap the audit findings before he / she leaves
  10. Thou shalt not forget to ask for a copy of the audit

— Jerry Fulmer, Institute of WorkComp Professionals

We’re here to help. As Certified WorkComp Advisors, we are trained to prepare employers for audits, spot errors and get them corrected.

To learn more about premium audits, and download a FREE copy of the AuditCheck® Program Workbook so you too can have an overcharge free and error free audit, click here.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

 

Important information on the classification of independent contractors vs. employees

Department of Labor opinion letter

Issued April 29, the opinion letter addresses whether a service provider for a virtual marketplace company is an employee of the company or an independent contractor under the FLSA. It concludes that the workers who provide services to consumers through this company’s virtual platform are independent contractors, not employees of the company. To make this determination, the Department’s Wage and Hour Division applied its longstanding and unchanged six-factor balancing test, derived from Supreme Court precedent:

  • The nature and degree of the potential employer’s control
  • The permanency of the worker’s relationship with the potential employer
  • The amount of the worker’s investment in facilities, equipment, or helpers
  • The amount of skill, initiative, judgment, or foresight required for the worker’s services
  • The worker’s opportunities for profit or loss and
  • The extent of integration of the worker’s services into the potential employer’s business

Other factors also may be considered. The DOL “does not determine employee status by simply counting factors but by weighing these factors in order to answer the ultimate inquiry of whether the worker is ‘engaged in business for himself or herself’ or ‘is dependent upon the business to which he or she renders service,'” stated the letter.

While the opinion deals with a specific company, wages, and fair labor standards and is not legally binding, legal experts suggest it has an effect beyond the employer addressed in the letter. Under the Trump administration there is more flexibility in defining independent contractors and the likelihood that some employer/employee relationships would be challenged is lower.

The key issue is control. When classified as independent contractors, workers should be able to control their own schedules, work in other jobs or businesses, choose whether to accept a project, and not receive extensive training.

Cautionary note: The opinion letter is based on the facts presented by the company and these facts may not be true of other gig economy workers. It does confirm employers must conduct the six-factor test when confronted with a classification question. Further, employers still must abide by laws in states such as California, Massachusetts, Connecticut and New Jersey that are more restrictive.

National Labor Relations Board memorandum

The National Labor Relations Board (NLRB), handed an important victory to Uber when it determined that the company’s drivers are contractors, not employees. In the first major policy action concerning the gig economy, the NLRB’s move relates primarily to unionization and other collective activities.

The decision was outlined by the board’s general counsel in a memorandum dated April 16, but made public in mid-May. In effect, the action tells gig economy workers not to report labor abuses to the Board because they are outside its jurisdiction. This judgment and the opinion letter cited above reverse the stance of the Obama administration that people who found work through apps could be considered employees. While the memo can be reversed by future general counsels, it carries considerable weight in how the Board enforces the law.

California: Independent contractor classification dealt another blow – ABC test must be applied retroactively

About a year ago, the California Supreme Court issued a groundbreaking decision when it adopted a new legal standard known as the “ABC Test,” making it much more difficult for businesses to classify workers as independent contractors in Dynamax vs The Superior Court of Los Angeles County. In a subsequent case, Garcia v. Border Transportation Group, a Court of Appeals held that the new test is limited to claims arising under the California Wage Orders. A May 3 letter from the California DLSE confirmed that the Dynamex decision extends to obligations imposed by the Industrial Welfare Commission wage order, making employers who misclassify workers responsible for California Labor Code obligations such as overtime, minimum wage, reporting time pay, record-keeping, business expense reimbursement, and meal and rest periods.

Moreover, the case was remanded, and pending legislation (AB5) would extend the reach of Dynamex’s ABC independent contractor assessment to unemployment and disability insurance and workers compensation.

Recently, the U.S. Court of Appeals for the Ninth Circuit held that the “ABC” test, used in the employee-versus-independent contractor analysis in cases involving IWC Wage Orders, must be applied retroactively. The ruling in Vazquez v. Jan-Pro Franchising Int’l Inc. means that the “ABC” test not only will be applied to cases going forward, but also to disputes dating back to before the new test was enacted. Based on California’s statute of limitations, employers could be liable for misclassifying workers as contractors going back four years before the 2018 decision.

The decision has significant implications for businesses using a franchise model or independent contractor model, including gig economy companies, since employees have more rights and benefits than independent contractors. The court essentially held that the “ABC” test applies to both a franchisee and the parent franchisor when deciding whether a group of workers are formal employees, pointing to increased exposure to liability for franchisors.

The unanimous federal appeals court ruling vacated an earlier dismissal of the complaint, and remanded the issue back to the lower district court, with instructions to follow the test issued in the Dynamex ruling. California employers who routinely enter into independent contractor arrangements with individuals should promptly and carefully review the status of those workers.

Note: AB5 advanced May 29 with the state Assembly passing the legislation 59-15

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Fatigue: a hidden workplace risk

Americans are known as a 24/7 society and often take pride in their sleep deprivation. Although some workers experience fatigue at work because of their lifestyle, the workplace is the root of fatigue for many workers. And, according to a study by the National Safety Council (NSC), 74% of employers underestimate the prevalence of fatigue in the workplace and 73% do not communicate with employees about fatigue.

Overtime, high risk hours (night or early morning), demanding jobs that require sustained attention physically and/or mentally, long shifts, quick shift returns, and no rest breaks are among the top fatigue risk factors identified by the NSC. The common argument made by employers is that productivity will be reduced if steps are taken to address fatigue. And the current employee shortage in many areas has exacerbated the problem.

Yet, as the work schedule progresses, workers tire naturally as they use up energy. Too few breaks and long shifts add to the strain on body and mind, leading to reduced alertness and lack of concentration. But employees are reluctant to say they are too tired to do their job safely for fear of being perceived as lazy, uncooperative, or losing needed overtime pay.

The result is not only a decline in productivity, but also increased accidents and near-misses. According to the NSC, 32% of reported injuries and near-misses are due to fatigued employees. Workplace fatigue problems can be cured, but the hurdle is recognizing the correlation between incidents and fatigue and developing solutions that are compatible with productivity objectives.

While each employer’s situation is unique, here are some considerations:

  • Analyze the workload and staffing imbalances that necessitate excessive overtime. Look at options such as reengineering processes to reduce staff hours and cross training employees
  • Rotate shift schedules to ensure no one is always on the night shift. Rotating shifts is a best practice that entails scheduling a worker for the night shift for two weeks and then giving them time off and then scheduling for day shifts for two weeks
  • Implement the 12-hour rule: make sure employees have 12 hours off between shifts
  • Control the boredom factor by varying tasks. Employees doing monotonous work and tasks are more susceptible to fatigue
  • Provide a designated area for employees to rest. A 15-30-minute power nap when working long shifts can be a great refresher
  • Educate workers on the symptoms of fatigue, the impact of shift work on sleep-wake cycles and the best ways to manage it. Provide resources to deal with sleep disorders
  • Let employees know they share responsibility with the company for preventing fatigue and, given adequate time away from work, they are responsible for getting enough sleep
  • Use ergonomic equipment designed to reduce physical strains
  • Provide plenty of water, healthy snacks
  • Evaluate the lighting and temperature in the workplace as well as other environmental issues that can produce fatigue. Minimize humidity, noise, vibration
  • Monitor fatigue. Research technology that fits your industry
  • Have a risk management system, including reporting of fatigue-related incidents, investigation, training and auditing

Rather than adopting the attitude “that’s just the way things have to be to get the work done” understanding how the workplace is set up, how the work is handled, and how fatigue is a serious, costly risk can guide employers to develop a plan that mitigates risks and maintains productivity levels.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Three compelling reasons why you should prepare a workers’ comp premium audit package

Work Comp Premium Audit

A premium audit happens every year, so some employers view it as routine and assume it will be correct, others take it lightly and may miss filing deadlines, but it is the savvy employer who prepares for the audit, in the same way they might prepare for an IRS audit. Here’s why:

  1. It likely will save you moneyThere are three important things to remember about Premium Auditors. First, their objective is to maximize your premium, after all they work for the insurance company. Second, overworked, they have tight time constraints. Third, the process is complex and prone to errors and omissions.While the list of possible errors and mistakes is endless, some common problems are incorrect job classifications, erroneous experience mod, improper charges for subcontractors, failure to cap payroll of executives, “excluded remuneration” included, credits or modifiers not applied, mathematical errors, multi-state exposures, and failure to take advantage of separation of payroll opportunities. If the employer does not provide complete data in a well-organized presentation, the auditor will default to what produces the greatest premium.

    When employers create their own audit package, they control the data the auditor observes, they simplify the auditor’s job, reduce probing questions, and build a reasonable defense for areas of disagreement. Since a Workers’ Compensation premium is estimated initially, the actual cost is determined through the premium audit, and proper preparation avoids higher and unexpected costs.

  2. Failure to complete audit in timely manner can double the cost of the premiumIn past years, the audit process was somewhat flexible. That changed in January 2017. The National Council on Compensation Insurance (NCCI) established an Audit Noncompliance Charge (NCCI item B-1429), which instructs workers’ compensation carriers to apply a charge up to two times the annual estimated premium, in addition to the annual estimated premium, for policyholders who do not complete their premium audits in a timely manner. Following the announcement by the NCCI, the mandate was adopted by independent rating organizations in Minnesota and Wisconsin (Minnesota Workers’ Compensation Insurers Association, and Wisconsin Compensation Rating Bureau, respectively).In addition, failure to cooperate with the audit may result in a cancellation of workers’ compensation coverage. Audit noncompliance will disqualify an employer from obtaining coverage from any insurance company until the outstanding audit is completed.

    The new form is attached to all new and renewal policies with effective dates on or after January 1, 2017. According to the new procedure, the carrier must make two attempts to obtain audit information and properly document those attempts. Policyholders who do not supply their payroll data after this point will be subject to the penalty charges.

  3. You can control the processThere are three ways an audit can take place: mail, phone, or a physical audit. Some employers receiving the mail audit pass it along to a finance officer or bookkeeper and that’s it. Yet, these audit forms are confusing and don’t ask the right questions. And if the person completing the form is not knowledgeable about workers’ comp, you will end up paying more than necessary. Similarly, a phone audit doesn’t always ask the right questions and errors can result from communication issues and misinterpretations.A physical audit is conducted on your premises. In addition to preparing the audit package in advance, employers should take steps to ensure the visit goes smoothly. Assign a knowledgeable, friendly person to work with the auditor and provide a clean, well-lit work space. Have the audit package ready and do not provide other information unless the auditor asks for it. Be sure a knowledgeable person escorts the auditor, if there’s a tour of the facility.

We are available to help. As Certified WorkComp Advisors, we are trained to prepare employers for audits, spot errors and get them corrected.

If you would want to build an error-free, overcharge-free audit download a FREE copy of our Work Comp AuditCheck Program, by visiting http://www.workcompauditcheck.com/.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com