Account for Coronavirus Furloughed Employees – NCCI Adds Basic Manual Rules
The Question – How do we account for Coronavirus Furloughed Employees has become the most popular question that we now receive from blog and newsletter readers.
This is not a replacement for Class Code 8871 – Telecommuting Clerical Employees. See this article for that distinction.
NCCI – the workers’ compensation rating bureau for approximately 40 states added in a few new sections to their rules. If you are the person responsible for the bookkeeping or accounting with your company and you are trying to account for Coronavirus furloughed employees, you are in luck.
Below is a summary of the rules that NCCI added to their manuals. I am not going to paraphrase the rules. I do not like quoting NCCI rules verbatim. In this case, the rules are very specific, so I added them in almost verbatim in parts. The very important part of the rule has been bolded.
Recording the payroll inaccurately could cost your business a large amount of insurance budget.
Payments made by an employer or any public governmental entity to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws or regulations, issued due to the COVID-19 (coronavirus) pandemic which impact an employer’s staffing or business operations.
Look at this part of the rule closely –
However, any appropriated funds or loans received by an employer as authorized by any law or regulation, or public governmental entity, that are used by an employer specifically to retain or hire working employees are not excluded.
This rule has a built-in expiration date –
This Rule 2-B-2-n is effective March 1, 2020. The expiration date of this rule will be December 31, 2020, which may be amended to an earlier or later date as circumstances warrant in consultation with state regulatory authorities. This rule will be removed from the Basic Manual automatically, upon the applicable expiration date.
Idle time does not count as furloughed.
For purposes of this Rule 2-F-1, idle time does not include “paid furloughed employees” or “payments to paid furloughed employees” as provided in Basic Manual Rule 2-F-3. The expiration date of this paragraph will be December 31, 2020, which may be amended to an earlier or later date as circumstances warrant in consultation with state regulatory authorities. This paragraph in this Rule 2-F-1 will be removed from the Basic Manual automatically, upon the applicable expiration date.
3. Payments to Paid Furloughed Employees During Federal, State, and/or Local Emergency Orders, Laws, or Regulations Issued Due to the COVID-19 (Coronavirus) Pandemic
Florida has a few exceptions that I did not note here.
For purposes of this Rule 2-F-3, ”paid furloughed employees” and “payments to paid furloughed employees” are defined within this rule. “Paid furloughed employees” means employees who continue to receive payments during a temporary layoff or an involuntary leave and are not performing any work duties for an employer.
“Payments to paid furloughed employees” means payments made by an employer or any public governmental entity to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws or regulations, issued due to the COVID-19 (coronavirus) pandemic which impact an employer’s staffing or business operations. Such payments do not include any appropriated funds or loans received by an employer as authorized by any law or regulation, or public governmental entity, that are used by an employer specifically to retain or hire working employees.
Your Workers Comp Premium Auditor and Your Payroll Records
Payments to paid furloughed employees must be assigned to Code 0012, in accordance with the Statistical Plan. Payments to paid furloughed employees made in accordance with this Rule 2-F-3 are excluded from the premium and experience rating calculations only if the employer keeps separate, accurate, and verifiable records. If separate, accurate, and verifiable records are not maintained, payroll is assigned to the classification for work normally performed by the employee prior to any emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic.
This can cost your company a large amount of premium if you do not keep accurate payroll records that separate out furloughed employees.
If an employee is requested to perform any duties for an employer, the employee is not deemed a paid furloughed employee for any period of time they are performing duties for the employer. If the employee is not deemed a paid furloughed employee, payroll must be assigned to the classification applicable to the work being performed in accordance with Basic Manual Rule 1-A.
This Rule 2-F-3 is effective March 1, 2020. The expiration date of this rule will be December 31, 2020, which may be amended to an earlier or later date as circumstances warrant in consultation with state regulatory authorities. This rule will be removed from the Basic Manual automatically, upon the applicable expiration date.
Set Up Your Accounting Package Now To Handle These Employees
Excel(r), QuickBooks(r), or Your Accounting Package can now be your best aide in keeping track of furloughed employees. Keep the employees listed under 0012 Coronavirus Furloughed Employees. Your premium auditor will ask for these records.
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