NCCI Manual Rule Changes

NCCI Manual Rule Changes Related to the COVID-19 (Coronavirus) Pandemic

The National Council on Compensation Insurance (NCCI) published Manual Rule Changes related to workers’ compensation during the current COVID-19 pandemic. The most significant change in this Circular Release is that NCCI has introduced the concept of “paid furloughed employees” and “payments to paid furloughed employees", along with the development of a new class code to assist in the separation of payments made to paid furloughed employees. These rule changes are effective 3/1/2020 with an expiration date of 12/31/2020, which may be amended to an earlier or later date as circumstances warrant.

1. What does this mean? NCCI has introduced the concept of “paid furloughed employees” and “payments to paid furloughed employees”.
2. What is a “paid furloughed employee”? A “paid furloughed employee” is an employee who continues to receive payments during a temporary layoff or an involuntary leave and is not performing any work duties for an employer.
3. What are “payments to paid furloughed employees”? “Payments to paid furloughed employees” are 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. 
4. How does this impact employers (policyholders)? Payments to “paid furloughed employees” must be assigned to classification code 0012 for workers compensation statistical reporting purposes. These payments will be excluded from premium calculations at your audit only if the employer keeps separate, accurate and verifiable records.
5. What does an employer need to do differently to prepare for final audit? The payments to “paid furloughed employees” must be shown separately in the records of the employer in order for the amounts to be identified and assigned to classification code 0012.
6. What if an employer does not show payments to “paid furloughed employees” separately? The payments to “paid furloughed employees” will be assigned to the classification code for the work normally performed by the employee.

To read the Countrywide–Announcement of Item B-1441–Revisions to NCCI Manual Rules Related to the COVID-19 (Coronavirus) Pandemic, you need to log in to the NCCI website.

In addition to the Manual Rule Changes, the NCCI also published a FAQ on April 17, 2020 that covers a number of important topics related to workers’ compensation insurance including the need for employers to maintain separate payroll records for employees, which have been temporarily reassigned to other class codes during the pandemic. The NCCI intends to continue to update the FAQ responses as warranted by new questions and developments. Read the NCCI FAQ.