By: Matthew Post, C&S Insurance
According to an April 2020 survey, conducted by the Brewers Association, 99 percent of craft breweries—virtually all, in other words—experienced some economic strain due to the coronavirus pandemic. This staggering figure includes 90 percent who saw declines in their on-site sales, and 89 percent who were forced to cancel 2020 events. No doubt for many, curtailed cash flow and production led to another tough reality: furloughs.
Three months later—as restrictions ease and the industry begins to make peace with a new normal—any inroads toward recovery are worth pursuing. And luckily, thanks to the Massachusetts DOI’s recent approval of a newworkers’ comp class code for furloughed employees, we’re now seeing an opportunity for brewers to lower their annual premiums. The following Q&A outlines what this code means, who can leverage it, and when qualifying brewers need to take action. (As soon as possible is the answer, by the way.)
Q: What is this new workers’ comp class code, and why does it matter?
A: Code 0012 is a newly approved workers’ comp class code. For those who aren’t familiar with the term, a “class code” is a four-digit code used by insurance companies to estimate what your premium should be, based on the risks associated with the type(s) of work your employees perform. Normally, brewers and brewery drivers would be assigned a code of 2121—with a rate that currently stands at $1.24 per $100 of payroll.
Because it is designed to address the folks on your payroll who were temporarily absent from work, this new code has a rate of zero ($0.00 per $100 of payroll). So even though you may have continued paying your furloughed employees, any of that payroll assigned to code 0012 would not be included in the premium calculations for your workers’ comp. That could potentially equal big savings.
Q: My brewery furloughed employees this year. Can we use this class code?
Yes, as long as you continued to pay those employees while they were furloughed, and provided you maintained “separate, accurate, and verifiable entries” within your payroll records.
Q: What about employees working from home? Does that count as furloughed?
No. According to the WCRIBMA, if an employee has been designated to work from home, and his/her duties are now of a clerical nature, his payroll during the pandemic period can be allocated to Code 8810 – “Clerical Office.” (As long as you keep those separate records for each employee affected.)
Q: What documentation is needed in order to leverage class code 0012?
You’ll need to provide a list of all furloughed employees, the employees’ normal workers’ compensation class codes, their weekly wages, furloughed dates, and anticipated dates of return to work. Your insurance agent should be able to help you compile and review these materials before audit.
Q: When does my brewery need to submit this information?
According to the WCRIBMA, employers making payments to furloughed workers need to alert their workers’ comp carrier within 60 days of the rule’s approval (7/10/2020), or within 25 days of beginning to may furlough payments, whichever is later. If your annual audit is approaching, you’ll want to prepare this information even sooner.
Q: I still have questions about the new class code. Who should I ask?
Your insurance agent should help you take advantage of this cost-saving opportunity, along with other pre-audit reviews. If you don’t have a dedicated agent and commercial risk advisor, our team of brewery insurance experts would love to answer any questions you may have. You can reach me, Matt Post, at mpost@candsins.com or 508.504.2012. We recently worked with a new client on their annual audit, and were able to implement the 0012 class code for a variety of employees—saving thousands on the company’s workers’ comp premium.
