Hearing May Create Telecommuting Class

Insurance Commissioner Ricardo Lara will hold a virtual public hearing later this month to consider a proposal to create a workers’ comp class for employees who perform clerical duties for their employer while working remotely. If approved, the move would bring California in line with more than 35 other states that have had a telecommuter class for decades. The hearing is slated for July 29th.

The proposal is part of the Workers’ Compensation Insurance Rating Bureau’s annual filing for proposed updates to the state’s insurance rating rules. The Bureau is a private organization with quasi-governmental responsibility. It is financially supported exclusively by insurance carriers in whose interests it operates.

In addition to creating the proposed 8871 classification for Clerical Telecommuter Employees, the filing also includes updated data reporting rules for carriers and the expected loss rates for promulgating 2021 X-Mods. Compline’s X-Mod estimator is already live and helping brokers prepare for the 2021 renewal cycle.

Rules for 8871

Under the proposed 8871 classification definition, the class would apply to employees performing clerical duties who work at least 50% of the time at their home or in an office space away from any of their employer’s locations. The time spent at the employer’s location must be spent performing clerical office or drafting duties and, as with the 8810 definition, the on-site work must be in a location that is separated by “buildings, floors, partitions, railings or counters” from all other work operations that are not clerical or drafting duties.

The rulemaking proposes to establish the classification as of January 1, 2021 but it will not set an advisory pure premium rate. Work on the 2021 proposed advisory rates will start in August.

The Bureau, however, has made it clear that it intends to use the same rate for both 8810 and 8871 until enough data is collected to create a separate rate for 8871 – a process it says that will likely take 4 to 5 years to complete (for past coverage of the 8871 Telecommuting class click here).

In nearly every state with a telecommuter class, the rate for telecommuters is significantly less than the 8810 rate for office-based clerical workers – often roughly half the rate. New York is the outlier as its rate for telecommuters is higher than the clerical rate for office-based employees.

Compline encourages the establishment of the new class. But it is advocating the rate of 8871 be set at 50% of the 8810 rate in accord with most of the other states. Carriers are free to set their own rates for the 8871 class, Compline says, but employers in California should not have to wait five years to get the benefit of a new class that should have been established years ago.