5 Things Business Owners Should Know About Payroll Reporting During COVID-19

April 2, 2020 • Missouri Employers Mutual

Published: April 2, 2020

Last updated: June 4, 2020

To provide you with the most current information, we’ve updated this post.

This post is related to COVID-19. For more, visit our COVID-19 Resource Center for Employers.

During the ongoing COVID-19 situation, many cities have issued “shelter in place” policies, closing the doors of non-essential businesses and slowing down the economy across the nation. As business owners work to keep their companies afloat and support their employees, they might be taking one or more of these actions:

  • Laying off or furloughing employees
  • Sending employees home while continuing to receive pay
  • Changing the way employees work
  • Engaging with government support programs such as the Shared Work Program

As an employer, you may know that your workers compensation premium is derived from your loss experience, industry trends and your payroll. With unprecedented staffing situations and a quickly evolving outlook, here’s what you need to know about payroll reporting for your work comp policy.

1. You might need to adjust your payroll.

Whether you’ve laid people off or just reduced some employees’ hours, your 2020 payroll will likely look different from what you anticipated. Many work comp carriers have announced that they will allow payroll adjustments for staffing changes related to COVID-19. Missouri Employers Mutual policyholders should communicate these changes with their agent, who will work with us to ensure they’re reflected in our records.

Here are some scenarios in which you might need to make adjustments:

You have fewer employees working, they’re working fewer hours, or both

Many businesses have cut employees’ hours or laid them off, resulting in lower payroll than expected. If you experience these types of staffing changes, contact your agent to help adjust your payroll.

Employees are doing different types of work than usual

Some employees might be working remotely, doing work that is less hands-on than usual and more administrative. In cases like these, your payroll might require classification code adjustments. Your agent and carrier can help determine whether you need this type of adjustment.

2. The NCCI filed a new class code for furloughed employees.

If you have furloughed employees – that is, you’re still paying employees during a temporary layoff or involuntary leave – it’s important to know that the NCCI filed a new class code for this situation: 0012. It is only applicable to employees who are receiving pay but not performing any work at all for you. If employees are performing clerical duties from home, even on a limited basis, they’re ineligible for this code. However, other codes like 8871 (telecommute) could be applicable to these employees.

It’s important to keep good records to take advantage of this new class code, if it applies to your employees. Check with your agent or contact us to find out if this change applies to your business.

3. Documentation is more important than ever.

At MEM, we’re documentation advocates from payroll to workplace safety. But when you’re responding to new developments by the hour, it can be tough to keep up with paperwork. Luckily, there’s not a lot of new documentation you need to keep if your business experiences staffing changes like reduced hours. You simply need to continue keeping the good payroll records you had going before COVID-19.

If your employees are furloughed or completing a different type of work, it is important to keep separate, accurate and verifiable records for class code 0012. Be sure to keep records of when the changes occurred. Include specific dates and details such as job duties no longer being performed and new responsibilities added. If employees are furloughed, how much will they be paid? Their full paycheck, or a portion?

Without good records, payroll will be assigned to the class code for work normally performed by the employee. If you use a payroll service, the service is likely already accounting for any furloughs as a separate line item. However, you should verify this with them. If you use payroll software such as Quickbooks, we recommend furlough wages be added as a new line item for the impacted period, similar to how overtime or sick pay would be shown.

4. Resources are available to help.

Federal, state and local governments have enacted a variety of programs to support businesses of all sizes through the impact that COVID-19 is having on the economy. The U.S. Small Business Administration offers guidance and loan resources to small businesses. The U.S. Department of the Treasury is also providing assistance for American workers and businesses.

In Missouri, the Shared Work Program provides business owners an alternative to layoffs in the face of reduced demand for work. Employers participating in this program are able to retain qualified employees by reducing their hours and supplementing income with unemployment benefits.

Participating in the Shared Work Program or other similar programs could reduce your work comp costs. If you’re considering or applying for support from these programs, let your agent or carrier know.

5. You’re not alone.

Whatever your staffing situation, communicate with your agent and insurance provider about changes that are occurring with your employees. You don’t have to navigate these changes or their implications alone. Our work comp experts are here to help ensure everything is reported and documented correctly, making any transitions as smooth as possible.

If you’re unsure about how employee changes might affect your work comp policy, get in touch with your agent or contact our Customer Care team at 1.800.442.0593.

April 2, 2020
Missouri Employers Mutual
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