Workers' Compensation Premium Audit: COVID-19 Updates

CGO is here to help you prepare for your Workers Compensation Premium Audit so you receive all appropriate credits. Due to various government-issued stay-at-home orders, adjustments to your actual payroll must be detailed and verified as indicated below.

Please continue to maintain proper record-keeping, as failure to do so can impact current and future audits.  

Payments to Furloughed Employees

If you continued to pay your employees to stay home and perform no work during a time where your business operations have been suspended or slowed down because of a federal, state, or local emergency order, you will need to identify the wages your company has paid to your furloughed employees and provide them to your auditor at the time of your audit.

Usually in times like this employers lay off nonessential employees. During the COVID pandemic the federal government came out with a Small Business Paycheck Protection Program loan that made funds available to employers but required employers to keep their employees on the payroll in order to get this loan fully forgiven and turned into a grant. Due to this provision many employers who might have otherwise laid off nonessential employees kept them on the payroll. Again, if you had any “furloughed employees” who were on the payroll but not actually performing any work duties this payroll will not get picked up as payroll under your Workers Compensation coverage.  

Payments made to paid furloughed employees will be excluded under most state orders, including Illinois (NY will include these wages at the clerical rate), if separate, accurate, and verifiable records are available.

Temporary changes in your Business Operations

If you have temporarily changed your business operations because of a federal, state, or local emergency order, you will need to identify these changes in business operations as they may affect the rating and classifications on your policy.

Employees working from home

• If your employees are temporarily being paid to work from home, please indicate these employees on the payroll records provided to your auditor.

Employees performing new or different job duties

• If the changes have resulted in reassignment of employees to different work, please indicate these employees on the payroll records provided to your auditor.

Verifiable Records

It is imperative to maintain proper record keeping. Verifiable records include, but are not limited to, hardcopy or electronic versions of:

• Payroll Ledgers, Journals, Registers, Vouchers, or Contracts
  
  

Incentive Pay

If you are paying your employees an incentive for working during COVID-19, these incentives will be included in the premium calculation.

Important Information Needed

Please provide the following to your auditor:

1. What date did you begin/end furlough for each employee?
   
   
2. Which employees are working from home and identify the time period the employees have been working from home.
   
   
3. What are the names of the employees who changed duties?
   • What date did that change occur?
   • What are their new duties?
   • What was their previous and current schedule?
4. What date did your operations change?
   • What are the new operations that your business is performing?

If you need further assistance please contact your Premium Auditor with questions.

Sources: NCCI and The Hartford