Critical Workers Comp Business Change Reporting Requirement
Another critical workers comp business change deadline occurs when an ownership change happens to the business. One area that many businesses forget in the process of changing – for example, buying another company – originates with not letting the agent or rating bureau know about the change. The correct term is Ownership Change.
This subject often comes up with the many changes businesses experienced during and after the pandemic. Each rating bureau has its own set of requirements. I know, one more thing to remember, but it can cost you big $$ in a few ways.
See the end of the article for the critical requirement – hint – diary it with a high priority.
Critical Workers Comp Business Requirement – Online or a Form
Let us look at how each Rating Bureau requests the business change info. Each bureau’s request revolves around almost the same information.
NCCI – Largest Rate Bureau
NCCI requires reporting certain business changes to it by using their online portal or by filling out almost the same information on an ERM-14 form. I am going to borrow from the form – you can see it at the link – to cover some of the changes that require notification. Even if you may not know exactly what boxes to check and what to say, the main concern can be seen in the last part of this article.
- Name and/or legal entity change The name and/or legal status of the entity has changed. DBA name changes do not need to be reported.
- Sale, transfer, or conveyance of all or a portion of an entity’s ownership interest. Complete or partial sale of the business entity’s ownership interest.
- Sale, transfer, or conveyance of an entity’s physical assets to another entity that takes over its operations. An entity’s assets have been sold or transferred. The acquiring entity has taken over the operations, and the selling entity has retained its legal business name.
- Merger or consolidation. Two or more entities have merged or combined to form a single entity.
- Formation of a new entity that acts as, or in effect is, a successor to another entity that:(Select one) Has dissolved Is nonoperative May continue to operate in a limited capacity
- Formation of a new entity. A new entity has formed that is not a successor to another entity. Report this change only to determine combinability with another entity.
- An irrevocable trust or receiver, established either voluntarily or by court mandate A change has occurred to the business, either voluntarily or by court mandate, requiring the entity to be put in a trust or receivership.
- Determination of combinability of separate entities Two or more entities may need to be combined or separated based on their ownership interest
NCCI has a great series on the ERM-14 video series on the form. The ERM-14 is not accepted in New Jersey or California. We will now cover California’s WCIRB requirement.
California’s WCRIB Online Only
The critical workers comp business change – ownership change – for California is online only. As with NCCI, they have many videos on how to accomplish the task. The WCIRB, as all the rate bureaus, has one critical requirement and covers many topics when an ownership change occurs.
The WCIRB usually only allows agents/brokers to submit the ownership change. Letting your carrier and agent know about the ownership change is part of the critical workers comp business requirement. Check out this page for many examples of an ownership or business change.
NJCRIB – New Jersey Rate Bureau Does Not Accept NCCI ERM-14
The New Jersey Compensation & Rating Insurance Bureau does not accept NCCI’s ERM-14 Change of Ownership form. Go here to make any critical workers comp business changes. An example of the form can be downloaded here. The NJCRIB also provides a required workers comp insurance carrier contact form.
The NJCRIB ERM-14 form looks strikingly similar to the NCCI ERM-14 form. I wanted to add in this section for any New Jersey-based or companies that may operate in NJ. I am still researching the time limit. At this time, it should be the same 90-day time limit as with the NCCI-ERM 14.
Most Critical Workers Comp Business Change – Ownership Change Reporting Time Requirement
Being late with this filing to the rate bureau(s) will cost you dearly. Each rating bureau has a section on when not reporting ownership changes becomes a big problem. The bureaus refer to them as Experience Mod Evasion rules. All of the rating bureaus have a common requirement. The time requirement = 90 days. If a critical workers comp business change or ownership change occurs on, for instance, July 1st, then you must notify three different entities:
- Rating Bureau – your agent broker in CA
- Agent/Broker
- Carrier
Once you exceed the 90 days, you will not celebrate like the picture. As with tax reporting, timeliness covers everything. The 90-day rule counts through weekends and holidays. Use this website to add 90 days to the ownership change date.
The most critical workers comp business change reporting requirement should come as no surprise – report the change of ownership the sooner the better.
