WORKERS' COMPENSATION INSURANCE AND RESERVES (Note)

12 Months Ended

Dec. 25, 2022

Workers' Compensation Insurance and Reserves [Abstract]

WORKERS' COMPENSATION INSURANCE AND RESERVES

We provide workers’ compensation insurance for our associates and permanent employees. The majority of our current workers’ compensation insurance policies cover claims for a particular event above our deductible limit, on a “per occurrence” basis. Effective July 1, 2022, we increased our deductible limit from $2.0 million to $5.0 million, on a “per occurrence” basis. This results in our being substantially self-insured.

Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value using discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The weighted average discount rate was 2.0% and 1.6% at December 25, 2022 and December 26, 2021, respectively. Payments made against self-insured claims are made over a weighted average period of approximately 6 years as of December 25, 2022.

The following table presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented:


(in thousands)	December 25, 2022		December 26, 2021
Undiscounted workers’ compensation reserve	$	270,468	$	273,000
Less discount on workers’ compensation reserve	19,458		16,806
Workers’ compensation reserve, net of discount	251,010		256,194
Less current portion	50,005		61,596
Long-term portion	$	201,005	$	194,598

Payments made against self-insured claims were $39.4 million, $41.9 million and $52.8 million for the fiscal years ended December 25, 2022, December 26, 2021 and December 27, 2020, respectively.

Our workers’ compensation reserve includes estimated expenses related to claims above our self-insured limits (“excess claims”), and we record a corresponding receivable for the insurance coverage on excess claims based on the contractual policy agreements we have with insurance carriers. We discount this reserve and corresponding receivable to its estimated net present value using the discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The rates used to discount excess claims incurred during the fiscal years ended December 25, 2022 and December 26, 2021 were 3.0% and 1.8%, respectively. The claim payments are made and the corresponding reimbursements from our insurance carriers are received over an estimated weighted average period of approximately 17 years. The discounted workers’ compensation reserve for excess claims were $76.7 million and $62.7 million, as of December 25, 2022 and December 26, 2021, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $75.2 million and $61.4 million as of December 25, 2022 and December 26, 2021, respectively.

The table below presents the estimated future payout of our discounted workers’ compensation claims reserve for the next five years and thereafter as of December 25, 2022:


(in thousands)
2023	$	50,005
2024	27,234
2025	16,601
2026	11,971
2027	9,531
Thereafter	58,963
Sub-total	174,305
Excess claims (1)	76,705
Total	$	251,010

(1)Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements.

Workers’ compensation cost consists primarily of changes in self-insurance reserves net of changes in discount, monopolistic jurisdictions’ premiums, insurance premiums and other miscellaneous expenses. Workers’ compensation cost of $29.8 million, $39.8 million and $49.4 million was recorded in cost of services on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended December 25, 2022, December 26, 2021 and December 27, 2020, respectively.