California’s Recommended Workers’ Comp Rate Reduced by 3.4%; Rescission of COVID-19 Payroll Reporting Offers Relief to Employers

July 29, 2021California

California employers may be impacted by recent decisions from Gov. Gavin Newsom and Insurance Commissioner Ricardo Lara regarding workers’ compensation insurance.

Workers’ Comp Rate Reduced

Commissioner Lara has approved an average pure premium rate of $1.41 per $100 of payroll effective September 1, 2021. The Commissioner’s recommended rate is 3.4%, or $0.05 less per $100 of payroll, than the rate approved for the previous 12 months.

The Commissioner’s recommended rate was lower than the rate proposed by both the insurance industry and the Workers’ Compensation Insurance Rating Bureau of California (WCIRB). The WCIRB had proposed an advisory pure premium rate of $1.50 per $100 of payroll, and the insurance industry had proposed a pure premium rate of $1.86 per $100 of payroll.

Workers’ compensation carriers have the discretion to set their own rates. The Commissioner’s pure premium rate is advisory only. To read the Commission’s order, click here.

COVID-19 Stay-At-Home Order Rescinded

The March 2020 COVID-19 Statewide Stay-at-Home Order has been terminated or will fully terminate on Aug. 10, 2021. Following a June 11, 2021 decision by Gov. Gavin Newsom, the following payroll reporting rules will no longer be in effect:

  • The definition of Clerical Office Employees and Clerical Telecommuter Employees during the pandemic
  • An exclusion of workers’ comp payments from an employee’s remuneration
  • An employer requirement to maintain records that document the change in duties and the segregation of workers’ comp payments under the Stay-At-Home order.

For more information about the recission of the Stay-At-Home executive order, click here.

MMA Is Here To Help

Marsh & McLennan Agency works with employers to develop workers’ compensation strategies and can help you create an action plan. For more information, contact your MMA representative.