Chapter 20: Workers’ Compensation
Workers' Compensation is a state-mandated benefit that requires all employers to pay for approved expenses resulting from a work-related injury or illness. This benefit is designed to be no-fault (blame is not assigned).
The University is self-insured for Workers' Compensation. Each campus contributes to a trust fund from which claims costs are paid. The University's third party administrator, Sedgwick CMS, determines whether a claim is compensable and, if so, pays appropriate costs, including medical care, temporary and permanent disability, and vocational rehabilitation.
The University also provides benefits to supplement the state-mandated temporary disability payments. These are coordinated by the employee's department by following the Workers' Compensation Payroll Procedures.
- Guiding Principles
- Your Role
- UC Benefits that Supplement Workers' Compensation
- Workers' Compensation Payroll Procedures
- Payroll Overpayments by Department
- Other Resources
- Injury can be prevented through safety, awareness, and training.
- Disability can be prevented through Transitional Work and Reasonable Accommodation.
- Benefits, when due, should be rapidly provided and well coordinated.
- These lower the human and financial cost to the employee, the department, and the University as a whole.
You play a key role in reducing the human and financial cost of injury, illness, and disability.
- Prevent injury. See Chapter 17: Health and Safety.
- If injury occurs, report the injury immediately. See protocol.
- Provide Transitional Work for temporary disabilities.
- Provide Reasonable Accommodation for permanent disabilties.
- Assure payroll and UC benefits are well coordinated.
UC Benefits that Supplement Workers' Compensation
Several UC benefits supplement Temporary Disability payments made by Sedgwick CMS. Your department coordinates provision of these benefits by following the Workers' Compensation Payroll Procedures.
- Your Payroll Processor should be famililar with implementing the Workers' Compensation Payroll Procedures.
- Know when to refer the employee to Campus Payroll and to the Benefits & Financial Planning unit of Human Resources.
- Know when to contact Benefits & Financial Planning to request activation of the Contingency Fund.
Workers' Compensation Payroll Procedures
When an employee is disabled due to a compensable injury, your department must follow special Workers' Compensation Payroll Procedures.
These procedures implement PPSM 44, and related contract language. They assure that your department:
- Replaces a portion of the employee's lost wages,
- Properly credits leave accruals,
- Properly reconciles time records,
- Properly credits retirement service, and
- Properly facilitates continuity of health insurance coverage.
The procedures and other resources are available on the DMS web site.
Manual Processing of UC Payroll
To prevent overpaying the employee, the UC payroll must be manually processed each pay period. Your Payroll Processor should place the employee on Sub 2.
Temporary Disability (TD) Payments
Sedgwick CMS pays Temporary Disability (TD) payments from the UC Trust Fund. The majority of these payments are made directly to the employee. Twice each month, the DMS unit of Human Resources emails to your department's Payroll Processor a spreadsheet listing all TD payments made by Sedgwick CMS.
Leave Banks that Supplement TD Payments Made by Sedgwick CMS
The employee can use Sick Leave, Vacation Leave, and Extended Sick Leave (ESL) to supplement the TD payments made by Sedgwick CMS.
Sick Leave supplements TD to bring the employee up to 100% of regular pay plus Shift Differential.
Vacation Leave supplements TD to bring the employee up to 100% of regular pay plus Shift Differential.
Extended Sick Leave (ESL) supplements TD to bring the employee up to 80% of regular pay plus Shift Differential.
Extended Sick Leave is paid for no more than 26 weeks maximum.
Work. Comp. Leave Bank and Reduction in Employee Pay
Your department's Payroll Processor converts TD payments to a Work. Comp. Leave bank of hours (similar to the Sick Leave and Vacation Leave banks). Each pay period, hours from the WC Leave bank are used and exhausted before any Sick Leave, Vacation Leave, or Extended Sick Leave hours.
This is best accomplished by reconciling the employee's time sheet. Hours are entered on the reconciled timesheet in this order:
- Worked hours
- Holiday hours
- WC Leave hours
- Sick Leave hours
- Vacation Leave hours (if the employee has elected to use Vacation)
- ESL hours (if the sum of the above hours is less than 80% of the total hours in the pay period)
The above hours are summed and divided by the total number of hours in the pay period to produce the percentage of pay that will be credited to the employee.
Very importantly, a Pay Reduction must also be processed. Since the employee has already been paid by Ocatgon for the Work. Comp. Leave bank hours on the time sheet, the University must reduce the employee's pay by the dollar amount paid to the employee by Sedgwick CMS. This avoids double payment of workers' compensation benefits.
To credit TD payments to UC payroll and to avoid overpaying the employee, the TD payments must be converted into:
- Work. Comp. Leave bank hours
- Dollars by which to reduce the employee's pay
For your department's convenience, we provide an online calculator to facilitate this conversion.
Service credit is accrued according to the percentage of pay credited to the employee. This includes Hours Worked, Holiday hours, and TD payments, as well as Sick Leave, Vacation Leave, and Extended Sick Leave used to supplement TD. This is why the time sheet is reconciled and includes hours from the WC Leave bank when calculating the percentage of pay credited to the employee.
While using Sick Leave, Vacation Leave, or Extended Sick Leave to supplement TD payments, the employee receives full credit for Holidays.
When Sick Leave and Vacation Leave are used to supplement TD, they continue to accrue at their regular rate. The employee can use the new accruals as soon as they accrue.
When Extended Sick Leave is used to supplement TD, Sick Leave and Vacation Leave continue to accrue at their regular rate. However, the employee cannot use these accruals until they return to work. If the employee separates from University employ without returning to work, the departement pays the employee the Vacation Leave accrued while the employee was on Extended Sick Leave.
After Extended Sick Leave is exhausted the department places the employee on Leave of Absence Without Pay. The employee continues to accrue Sick Leave and Vacation Leave at their regular rate. However, the employee cannot use these accruals until they return to work. If the employee separates from University employ without returning to work, the department does not pay the Vacation Leave that accrued while the employee was on Leave of Absence Without Pay.
Health Insurance Premiums and Contingency Fund
If the 26 weeks of Extended Sick Leave (ESL) become exhausted:
- Place the employee on Leave of Absence Without Pay.
- Contact the Benefits & Financial Planning unit and request that the Contingency Fund be activated to pay the employee's Medical benefit insurance premium.
- Refer the employee to Campus Payroll, so that the employee can arrange to make their own payment of Dental and Vision premiums.
- Refer the employee to the Benefits & Financial Planning unit to inquire into any other benefits to which they may be entitled. They may be entitled to Supplemental Disability through Liberty Mutual.
Payroll Overpayments by Department
If the department inadvertently overpays the employee by failing to reduce their pay by the amount of the Sedgwick CMS TD payments, or by failing to end payments of ESL beyond 26 weeks, or by any other oversight or error, the department must follow the procedures set forth in the UC Accounting Manual regarding Payroll Overpayments.
UC Accounting Manual
V. Accounts Receivable Operations
R-212-2 (TL 59, 12/30/93)
--- II. CONTROL PROCEDURES
--------A. SUNDRY DEBTOR ACCOUNTS
----------------a. Employees and the General Public
--------------------3. Notes Regarding Employee Indebtedness
------------------------a. Payroll Overpayments
Reference: Accounting Manual R-212-2
3) Notes Regarding Employee Indebtedness
(a) Payroll Overpayments.
The recovery of any amount of payroll overpayment, whether the error is with gross salary or net salary, legally requires an advance written notice to the employee and a written agreement, which includes a repayment schedule, before recoupment. Examples of errors with gross salary are payment of overtime to the wrong employee, or the correction of payroll based on corrected hours. Examples of when errors can occur with net salary are when the employee has authorized a deduction, such as parking, or the deduction is otherwise required, such as retirement, and the deduction is not taken. In all cases, prior authorization of the repayment is only effective for purposes of authorizing a set off if the employee honors the terms. If the employee later reneges on the agreement, the repayment schedule should be renegotiated. If the employee objects to a reasonable repayment schedule or to any schedule at all, collection procedures as described above should be implemented. Exception: Within established time frames, the law provides for retroactive correction of income and FICA/Medicare tax deductions. The employee should be notified of the adjustment and a reasonable repayment schedule worked out.
- Absence Management Manual
- Benefits & Financial Planning
- Campus Payroll
- Cost of Late Reporting study
- Disability Management
- Health and Safety
- Injury Protocol
- Reasonable Accommodation
- Supervisor Incident Report (SIR) form
- Transitional Work
- Workers' Compensation Resources