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  • Andy Adams

Texas Mutual Announces That It Will Exempt From Payroll Workers Furloughed WITH PAY

Please be advised that today Texas Mutual announced the following in an Agents FAQ:

If a policyholder suspends operations due to COVID-19, but continues paying employees, how will Texas Mutual treat this payroll?

Although not required by manual rules, given the unprecedented nature of COVID-19, we are willing to exempt this payroll from the premium calculation. To do so, we require advanced notice in writing from the agent of record of the policyholder’s intention to temporarily pay employees not performing any duties on behalf of the policyholder. The policyholder must also maintain adequate records to distinguish this payroll for premium audit purposes. (emphasis added)

This will be welcome news for many employers trying to decide how to handle the COVID-19 challenge. HOWEVER, Texas Mutual customers should note that it requires ADVANCED notice from the agent of record.

It is unclear how other carriers will treat this situation. NCCI has indicated that employees furloughed with pay should be treated as if they were on vacation or on sick pay. Here is NCCI's FAQ on the subject:

A business has suspended operations due to COVID-19, but continues to pay employees, although they are at home and not working. Is this payroll included in the premium calculations for workers compensation?

Although a pandemic is not specifically listed within the manual rules, the existing rules for wages will still apply for this type of event and payroll should be included in the premium calculation.

Wages or salaries paid to employees while they aren’t working because of the suspension of the employer’s operations due to COVID-19 could be included in payroll in accordance with Rule 2-B-1-a in NCCI’s Basic Manual.

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