Telecommuting and Workers Compensation: What We Know

INTRODUCTION

The COVID-19 pandemic has caused a dynamic shift in the workplace as many employees transitioned to working remotely. According to the US Bureau of Labor Statistics (BLS), over one-third of the workforce reportedly had worked from home because of COVID-19 as of May 2020.1 While some have returned to an in-office setting, many continue to telecommute. Telecommuting is particularly prevalent in the Office and Clerical industry group, which accounts for almost 60% of total payroll, as shown in the chart below.2 In fact, approximately three-quarters of office-based business and professional employees had been working from home early in the pandemic.3 Pandemic-related changes in job duties and other shifts in exposure may result in payroll movement both within and to the Office and Clerical industry group, subsequently impacting the loss experience.

Chart 1

The pandemic has demonstrated the ability of many industries to have an increasingly flexible workplace—raising questions about what the future may hold and the potential of long-term impacts. This article examines the classification of telecommuters and potential implications of an increase in telecommuting on workers compensation (WC). More detail on remote work and the changing work environment in 2020 is available in NCCI’s Quarterly Economics Briefing, “Remote Work Before, During, and After the Pandemic.”

TELECOMMUTING CLASSIFICATION

Much of the Office and Clerical industry group is comprised of the clerical office employees class code (Code 8810), with a smaller portion accounted for by its telecommuting counterpart, the clerical telecommuting employees class code (Code 8871).4 Businesses such as insurance companies or doctors’ offices are not eligible for these class codes because clerical work is included as part of their principal business and specified in their respective classification descriptions. As an example, consider an insurance company where nearly all employees are now telecommuting as a result of the COVID-19 pandemic. Pre-pandemic, it would have been classified in the insurance companies—including clerical & salespersons class code (Code 8723) and will remain so today. This is because Classification Code 8723 includes clerical work and is therefore not eligible for the clerical telecommuting employees class code (Code 8871).

While more employees than ever are currently working from home, not all businesses qualify for clerical telecommuting Class Code 8871 because either:

  • the current classification code description includes clerical work,
  • the work is not classified as clerical work, or
  • the employees do not telecommute a majority of the time.

Due in part to these limitations, the clerical telecommuting class code (Code 8871) is relatively small, accounting for approximately 0.5%, or $13B, of countrywide payroll in 2020.5 For comparison purposes, the clerical office employees class code (Code 8810) accounts for approximately 30%, or $734B of countrywide payroll during the same period. Because many of the businesses whose employees have shifted to working from home continue to have their exposure reported in their traditional class code, a significant shift to the clerical telecommuting class code (Code 8871) as a result of the pandemic was not seen in 2020 based on preliminary data reported to NCCI. Another consideration when looking for shifts in classification is the timing of policy changes. In early 2020, most businesses probably considered telecommuting to be a short-term accommodation for business continuity. From a practical perspective, if more permanent changes occur, the impact of payroll shifts among classifications may occur in 2021 and beyond.

A CHANGING WORK ENVIRONMENT

Although there was not a significant shift to the telecommuting class code in 2020, telecommuting exposure is embedded in many other classifications within the Office and Clerical industry group (e.g., teachers, bankers, and radio broadcasters). The table below shows the top 15 codes ranked by payroll volume in the Office and Clerical industry group, which make up 99% of that industry group’s payroll.

Chart 2

Almost half of the Office and Clerical industry group payroll is accounted for by the clerical office employees class code (Code 8810); however, much of the remaining payroll is from class codes that include clerical work in their description and is not eligible to be written in the clerical telecommuting class code (Code 8871). Therefore, the increase in telecommuting exposure may not result in a classification change but may result in a change in loss experience.

At the same time, not all job functions may be performed remotely. The BLS states that more than 60% of jobs require a significant on-site presence.6 In situations where telecommuting is not plausible given current job functions, anecdotal evidence suggests that some workplaces have adapted to allow employees to continue working in different capacities. In these instances, the job being performed (and thus the classification) may change to allow for telecommuting. For example, a traveling accountant (Code 8803), who is no longer able to travel, may now perform clerical work remotely, and therefore may be reclassified into the clerical telecommuting class code (Code 8871). This is one of many examples in which a change in job duties could result in payroll movement across class codes within the Office and Clerical industry group.

IMPLICATIONS FOR WORKERS COMPENSATION LOSS EXPERIENCE

Traditionally, the Office and Clerical industry group has had better loss experience compared with other industry groups. While it accounts for almost 60% of payroll exposure, the Office and Clerical industry group accounts for only 11% of premium—primarily due to its lower average loss costs relative to the other industry groups.

Not all class codes within the Office and Clerical industry group have the same experience or the same ability for employees to telecommute. Hospital employees, for example, may be required to maintain some degree of on-site presence. As seen in the chart above, hospital workers comprise 3% of overall payroll exposure but 12% of premium. Higher class code premiums are generally indicative of worse average loss experience relative to the other classes in the industry group.

Another comparison may be made using loss costs as a proxy for experience and grouping class codes based on their employees’ potential to telecommute. As shown in the table below, employees in class codes with higher telecommuting potential (e.g., salespersons and teachers) generally have lower loss costs, and thus better experience, when compared with employees in class codes with lower telecommuting potential (e.g., doctors and child care center employees).7

Chart 3

While there is some variation in cause of injury among classes within the Office and Clerical industry group, the predominant cause of injury is slip or fall (accounting for almost 40% of lost-time claims). The second most common cause of injury is strains, which includes repetitive-motion claims (e.g., carpal tunnel). Although repetitive-motion strains account for only 2% of all WC lost-time claims, they are relatively more prevalent in the Office and Clerical industry group—and, more specifically, in class codes with a high potential for employee telecommuting, such as clerical office employees (Code 8810) and insurance companies (Code 8723).

Repetitive-motion strains tend to be less severe than other claims in the Office and Clerical industry group. For example, a typical carpal tunnel claim costs approximately 30% less than an average claim in the Office and Clerical industry group. The chart below displays the average severity for various cause-of-loss categories relative to the overall average claim severity across8 all lost-time claims in the Office and Clerical industry group. Percentage shares of Office and Clerical industry group claims are also included.

Chart 4

Office equipment, home office space, and ergonomic challenges have become broader telecommuting concerns. This may potentially contribute to an increase in the number of work-related slips and falls and repetitive-motion claims (e.g., exposed cords, distractions, and makeshift office arrangements). A potentially offsetting consequence of increased telecommuting is a decrease in the number of work-related motor vehicle accidents, which tend to be more costly than other causes of injuries.9 Due in part to the Office and Clerical industry group’s relatively low claim frequency,10 with all else equal, a significant shift in the mix of claims would need to occur before a meaningful impact on overall WC would be observed. For example, with all else equal, even if the number of carpal tunnel claims for high-potential telecommuters and clerical office employees (Code 8810) doubled, there would be a negligible impact on the Office and Clerical industry group.

LOOKING FORWARD

COVID-19 has had a notable impact on the workforce and has forced companies to revisit their telecommuting protocols. Companies are adapting from a risk management perspective as well. Traditional safety measures were put in place in the workplace to mitigate and eliminate physical hazards specifically encountered on the job, such as ergonomic hazards. An increase in the use of telecommuting has created new vulnerabilities. For example, employees may not be able to identify and address early symptoms of repetitive trauma disorders that could arise from ergonomic hazards in makeshift home offices—which could lead to these injuries becoming more prevalent.11 Companies have also changed risk management strategies to include remote workplace reviews, defining job duties to prevent claims on injuries arising from non-work-related activities, and identifying specific business hours.12

These workplace changes are likely to continue in a post-pandemic environment. Will we see payroll shifts within the Office and Clerical industry group? An improvement in loss experience? An increase in repetitive-motion claims? NCCI will continue to monitor trends in telecommuting and provide appropriate updates on workers compensation system impacts.

​This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.
 

1“Supplemental data measuring the effects of the coronavirus (COVID-19) pandemic on the labor market,” Labor Force Statistics from the Current Population Survey, US Bureau of Labor Statistics, www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm, accessed January 14, 2021.

2Based on countrywide data from NCCI’s Statistical Plan. Countrywide includes AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, NC, NE, NH, NM, NV, OK, RI, SC, SD, TN, UT, VT, VA, WV. Excludes states where NCCI provides ratemaking services in which the clerical telecommuting employees class code (Code 8871) is not available.

3Patrick Coate, “Remote Work Before, During, and After the Pandemic,” Quarterly Economics Briefing, NCCI, January 2021, www.ncci.com/Articles/Pages/Insights_QEB_2020_Q4_Remote-Work-Pandemic-Redirect.aspx

4Class Codes 8810 and 8871 are considered standard exception class codes, which are used to report experience from occupations common to many businesses. See NCCI’s Basic Manual for Workers Compensation and Employers Liability Insurance, 2001 Edition, for further details.

5Based on NCCI’s Policy data, for policies effective from January through November 2020. This data is estimated and not audited. Countrywide includes AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, NC, NE, NH, NM, NV, OK, RI, SC, SD, TN, UT, VT, VA, WV. Excludes states where NCCI provides ratemaking services in which the clerical telecommuting employees class code (Code 8871) is not available.

6“Ability to work from home: evidence from two surveys and implications for the labor market in the COVID-19 pandemic,” Monthly Labor Review, US Bureau of Labor Statistics, June 2020, www.bls.gov/opub/mlr/2020/article/ability-to-work-from-home.htm

7Based on approved rates and loss costs from filings using data valued as of December 31, 2018.

8Based on countrywide data from NCCI’s Statistical Plan, Policy Year 2018 at latest report and undeveloped. Countrywide includes AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, NC, NE, NH, NM, NV, OK, RI, SC, SD, TN, UT, VT, VA, WV. Excludes states where NCCI provides ratemaking services in which the clerical telecommuting employees class code (Code 8871) is not available.

9Anae Myers, Victor Wong, and Tom Daley, “COVID-19’s Impact on Motor Vehicle Accidents in Workers Compensation,” NCCI Research Brief, November 2020, www.ncci.com/Articles/Documents/Insights_COVID-19_Impact_Motor_Vehicle_Accidents-WC.pdf

10Claim frequency is measured relative to payroll.

11Meghan Delaney and Daniel O’Brien,“Employer Steps to Mitigate Telework Injury Issues,” Law 360, www.law360.com/articles/1333519/employer-steps-to-mitigate-telework-injury-issues, accessed January 14, 2020.

12Dylan Swarts, “How the ‘Remote Employee’ Impacts Your Workers’ Compensation Coverage,” Swarts, Manning & Associates Insurance Services, February 6, 2019, swartsmanning.com/2019/02/06/how-the-remote-employee-impacts-your-workers-compensation-coverage/



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