California Workers’ Comp to Exclude COVID-19 From Rating, Payroll

The governing committee of the Workers’ Compensation Insurance Rating Bureau of California on Friday voted unanimously for a special regulatory filing that includes excluding COVID-19 claims from the experience rating and excluding payments to employees who continue to be paid while not working.

The committee’s vote authorized the WCIRB to file with California’s insurance commissioner rule changes to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) and the California Workers’ Compensation Experience Rating Plan—1995 (ERP) in response to the impact of the COVID-19 pandemic.

The changes, if approved by the commissioner, would:

• Exclude COVID-19 claims from the experience rating: Claims arising directly from a diagnosis of COVID-19 with an accident date on or after Dec. 1, 2019, would be excluded from the experience rating calculations of individual employers. Since the occurrence or non-occurrence of COVID-19 workers’ comp claims incurred by an employer is unlikely to be a strong predictor of that employer’s future workers’ compensation claim costs, the inclusion of such claims in an experience modification calculation would not meet the intended goal of experience rating.
• Exclude payments to employees who continue to be paid while not working: Payments made to employees who are continuing to be paid while not engaged in any work activities would be excluded from reportable payroll. This exclusion would apply while California’s statewide stay-at-home order is in place and for up to 30 days thereafter if the employee continues not to work. Excluding this payroll recognizes the extraordinary circumstances resulting from the stay-at-home order and the fact that employees not engaged in work activities have virtually no work-related exposure.
• Allow assignment of classification 8810 for temporary change in duties: The temporary assignment of Classification 8810, clerical office employees, would be allowed for employees whose job duties meet the definition of a clerical office employee. This provision would apply while California’s statewide stay-at-home order is in place and for up to 60 days thereafter if the employee continues to meet the definition of a clerical office employee, but does not apply to the payroll of employees whose payroll is otherwise assignable to a standard classification that specifically includes clerical office employees.

The WCIRB earlier this month voted not to submit a July 1, 2020 rate after meeting to review the WCIRB actuarial committee’s analysis of Dec. 31, 2019 California workers’ comp experience. It found that the indicated advisory pure premium rate was 1 cent above the average reported rate.

Given the minor indicated change and the high level of uncertainty of the potential effects of the COVID-19 pandemic and the impending economic downturn on payrolls and claims costs, the potential slowdown in claims activity due to the statewide stay-at-home order, and emerging claims arising from COVID-19 diagnoses, the committee unanimously decided not to submit a July 1, 2020 filing.