Due to the COVID-19 pandemic, California’s workers’ compensation rating agency plans to implement a new class code for telecommuting employees on Jan. 1, 2021.
The Workers’ Compensation Insurance Rating Bureau of California started work on the new classification after swaths of companies ordered employees that could work remotely to start working at home after the state and local governments issued stay-at-home orders to contain the spread of the coronavirus.
The new code for telecommuting workers will be 8871. Under a prior emergency rule, the Rating Bureau had recommended that employees who were thrust into telecommuting because of the COVID-19 outbreak be assigned the 8810 “Clerical Administration Employee” code.
This is a major change in the class code structure and will affect employers throughout the state, so it’s important that you prepare for it if you have staff working from home.
While the telecommuting code will be new to California, a similar code ― 8871 “Clerical Telecommuter Employees” ― has already been in use for a few years in a number of other states where the National Council on Compensation Insurance serves as the rating bureau.
To qualify for that class code, an employee must spend “more than 50% of their time performing clerical duties from a clerical work area located within their home.”
Additionally, the NCCI released an advisory in March 2020 that employers should start reporting class code 8871 for employees who have been asked to work from home due to the pandemic.
Up until now, in California, telecommuting employees whose duties meet the definition of clerical employees in the California Workers’ Compensation Uniform Statistical Reporting Plan have been assigned class code 8810 “Clerical Office Employees,” or their employer’s standard classification if that classification specifically includes clerical office employees.
The Rating Bureau has proposed that class code 8871 be the code for clerical employees who work more than 50% of their time at their home or other office space that is not on the employer’s premises. This will help the Bureau track accident and injury rates for telecommuting employees, and it will align California’s class code system with those of a majority of states (the NCCI is the rating bureau in 38 states).
As mentioned, the class code will be used only if the class code for the employer does not include clerical employees. Currently there are 41 class codes that include clerical staff. There are also two codes that specifically exclude them.
If a company includes all of its staff in the same code, any clerical staff on its payroll are not assigned the 8810 Clerical Employee class code and are instead assigned the code for the company as a whole.
For the sake of continuity, the Rating Bureau has recommended that those 43 class codes be amended to specifically include or exclude clerical telecommuting staff.
What you should do
If you have staff on your payroll who are telecommuting, you should start preparing your accounting or bookkeeping software to add in this code for when your policy comes due in 2021. Starting work on this now can help your insurer more accurately price your future policies, or when they decide to audit your payroll.
Conversely, you should not attempt to change the class code for your currently telecommuting employees now or at any time before Jan. 1, 2021, as the final rules have not yet been written, approved or promulgated. They also need to be approved by the state insurance commissioner.
The Rating Bureau plans to apply the rate for the class code for clerical employees to the new class code for the first few years and until it can gather enough data to set a unique rate for the code. That could take a number of years, as the Bureau typically uses a window of the past three years of claims experience and costs when setting class code rates.