Employers – Track Payroll for Non-Working Employees

Given the current circumstances, many employers are still paying their staff who are not working due to the current restrictions. Several programs, loans, and grants have been created to assist businesses and those individuals who are feeling the hardest hit of the economic crisis. With so many changes and conditions for using any funds received to alleviate the financial hardships, it is recommended that employers set up a separate tracking document for employees who are being paid but not working.

Tracking the use of funds to support the wages of staff will help for a several reasons. Of particular note is that employers will still have to include the payroll paid to these non-working employees in the calculation of their workers’ compensation premium. The National Council on Compensation Insurance (NCCI) is preparing a code for this reporting. It plans to submit it for approval by state regulators in 36 states where it is listed as the official rating bureau. The State of Florida is one of the 36 that uses the NCCI as its rating bureau. States that individually manage their rating bureaus are working on solutions and regulations on how this will impact payroll calculations. If accepted, this code change would be retroactive to March 1, 2020, with no set end date since that depends on the length of state-mandated business shutdowns.

The change that NCCI is recommending would take the furloughed employees’ payroll for the time that they are not working and remove it from the calculation. The theory for this is that if the employees are not working, then there is not a need for the workers’ compensation to be part of their benefits for that time frame. However, this would also mean that the company can not report any claims for that employee during that same time frame. This temporary option should not have any material impact on the employees. Additionally, the NCCI will be tracking all COVID-19 related claims.

Since these wages may be processed differently, employers should create a separate tracking system to ensure that they have a simple and accessible document to manage this impending change. A tracking system is also beneficial for those who have received a Paycheck Protection Program (PPP) loan and hope to have a majority, if not all, of the funds forgiven at the end of this crisis.


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