Policy Name:	Penalties for Late Payment and Reporting
Policy #:	EP-16-01
Code/Rule Reference	ORC 4123.32, 4123.41; OAC 4123-17-14.2, 4123-17-16.
Effective Date:	January 1, 2023
Approved:	Rex Blateri, Chief of Employer Services
Origin:	Employer Policy
Supersedes:	Penalties for Late Payment and Reporting policy effective January 1, 2019.
History:	Revised January 31, 2023; July 22, 2019; August 15, 2018; April 11, 2014. New policy October 17, 2008.
Review Date:	January 1, 2028

 

 

I.      Policy Purpose

 

The Ohio Bureau of Workers' Compensation (BWC) assesses penalties in accordance with the applicable laws and rules whenever private employers (PA employers) and public employer taxing districts (PEC employers) pay their required premiums, or file or pay amounts due under the annual payroll report, after established due dates. This policy explains current and historical penalty information.

 

II.    Applicability

 

This policy applies to BWC Employer Services, BWC Finance, PA employers, PEC employers, and their authorized representatives.

 

III.   Definitions

A.    Deferment fee: The fee BWC charges to a PEC employer who defers payment of installments due prior to April 30. The fee is 0.94 percent (0.94%) of the total amount of the deferred installments.

B.    Installment due date: The date on the invoice provided by BWC indicating when premiums are due.

C.   Penalty: BWC assesses penalties to employers for late payment, and for failure to file or pay amounts due under the annual payroll report. The penalty for late payment may be a percentage of the premium due. A penalty for failure to file or pay amounts due under the annual payroll report is removal from all rating plans and discount programs.

D.   True-up due date: For PA employers, this date is August 15 immediately following the conclusion of policy years ending on or after June 30, 2016. For PEC employers, this date is February 15 immediately following the conclusion of policy years ending on or after December 31, 2016.

IV.  Policy

A.    PA employer late payment penalties for policy years beginning on or after July 1, 2015: If an employer fails to pay premium or assessments by the installment due date, BWC may assess a penalty at the interest rate established by the state tax commissioner pursuant to ORC 5703.47, or assess a penalty of five dollars ($5), whichever is greater. The interest rate established by the state tax commissioner is published annually by October 15, with an effective date of January 1 of the following year.

B.    PA employer late payment penalties for policy years beginning prior to July 1, 2015.

1.    As used here, “prime interest rate” means the average bank prime rate. BWC shall determine this rate in the same manner as a county auditor determines the average bank prime rate under ORC 929.02. BWC will use the Federal Reserve Board’s H.15 Selected Interest Rates publication every June to determine the prime interest rate for the subsequent policy year beginning July 1.

2.    If a PA employer fails to report actual payroll within two months after the end of the payroll period, BWC will increase the amount due by an amount equal to one percent (1%) of the unpaid premium. This increase shall not be more than fifteen dollars ($15) or less than three dollars ($3).

3.    If a PA employer fails to pay premium when due, BWC will add a late reporting fee of not more than thirty dollars ($30) to the premium, plus an additional penalty as follows:

a.    For a premium sixty-one (61) to ninety (90) days past due, the penalty will equal the prime interest rate multiplied by the premium due;

b.    For a premium ninety-one (91) to one hundred twenty (120) days past due, the penalty will equal the prime interest rate plus two percent (2%), multiplied by the premium due;

c.     For a premium one hundred twenty-one (121) to one hundred fifty (150) days past due, the penalty will equal the prime interest rate plus four percent (4%), multiplied by the premium due;

d.    For a premium one hundred fifty-one (151) to one hundred eighty (180) days past due, the penalty will equal the prime interest rate plus six percent (6%), multiplied by the premium due;

e.    For a premium one hundred eighty-one (181) or more days past due, the penalty will equal the prime interest rate plus eight percent (8%), multiplied by the premium due.

4.    At no time shall the additional penalty exceed fifteen percent (15%) of the premium due.

5.    BWC will use the average prime rate in effect at the time of the premium payment to calculate actual penalties.

C.   PEC employer late payment penalties.

1.    If a PEC employer fails to pay  premium or assessments by the installment due date, BWC may assess a penalty at the interest rate established by the state tax commissioner pursuant to ORC 5703.47, or assess a penalty of five dollars ($5), whichever is greater. The interest rate established by the state tax commissioner is published annually by October 15, with an effective date of January 1 of the following year.

2.    ORC 4123.41 establishes the payment due dates for PEC employers.

a.    For policy years beginning on or after January 1, 2017, the total amount of estimated annual premium is due by December 31, unless the employer participates in an installment payment plan. See the Prospective Billing Installment Payments policy for additional information.

i.      BWC will invoice all eligible PEC employers on a twelve (12) payment installment plan.

ii.     A PEC employer may elect to defer payment of installments due prior to April 30. If such election is made, BWC will charge the employer a deferment fee.

b.    For the policy year beginning January 1, 2016:

i.      On or before May 16, 2016, no less than fifty percent (50%) of the premium due.

ii.     On or before September 1, 2016, the total premium due.

c.     For the policy year beginning January 1, 2015:

i.      On or before May 16, 2016, no less than fifty percent (50%) of the premium due.

ii.     On or before September 1, 2016, the total premium due.

d.    For policy years beginning on or before January 1, 2014:

i.      On or before May 15 no less than forty-five percent (45%) of the annual premium due.

ii.     On or before September 1 the total annual premium due.

D.   Penalties for failure to file or pay amounts due under the annual payroll report, also known as “true-up.” See the Payroll True-Up policy for additional information.

1.    BWC will remove the employer from all rating plans and discount programs for the policy year immediately following the policy year to which the annual payroll report pertains. The employer will be base or experience rated as determined by the expected losses of the employer pursuant to OAC 4123-17-33 and 4123-17-34.

2.    The employer may be ineligible for future program participation. See the specific program policy for additional information.

3.    The premium and assessments due from the employer for the policy year to which the annual payroll report pertains will be calculated based on the estimated payroll of the employer used in calculating estimated premium due, increased by ten percent (10%).

E.    BWC may establish a grace period during which a penalty will not be assessed to an employer for late payment or late reporting.

F.    Resolution of complaints.

1.    Employer complaints for late payments are processed under the Retroactive Coverage and Penalty Abatement policy.

2.    Employer complaints for late reporting are processed under the Payroll True-Up policy.

3.    An employer may appeal late fees and penalties through BWC’s adjudication process  See ORC 4123.291.

4.    BWC may certify the amount of premium due to the Office of the Attorney General of Ohio (AG) for collection. BWC may also assess penalties on any premium the AG collects unless the AG agreement states otherwise.