WORKERS' COMPENSATION INSURANCE AND RESERVES

12 Months Ended

Dec. 31, 2023

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 $5.0 million deductible limit, 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. The discount rates used to estimate net present value are based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred and the weighted average duration of the payments against the self-insured claims. Payments made against self-insured claims are made over a weighted average period of approximately 5.5 years as of December 31, 2023. The weighted average discount rate was 2.4% and 2.0% at December 31, 2023 and December 25, 2022, respectively.

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 31, 2023		December 25, 2022
Undiscounted workers’ compensation reserve	$	214,611	$	270,468
Less discount on workers’ compensation reserve	18,096		19,458
Workers’ compensation reserve, net of discount	196,515		251,010
Less current portion	44,866		50,005
Long-term portion	$	151,649	$	201,005

Payments made against self-insured claims were $45.0 million, $39.4 million and $41.9 million for the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, 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 and the weighted average duration of the payments against the excess claims. The claim payments are made and the corresponding reimbursements from our insurance carriers are received over an estimated weighted average period of approximately 18 years. The rates used to discount excess claims incurred during the fiscal years ended December 31, 2023 and December 25, 2022 were 4.1% and 3.0%, respectively. The discounted workers’ compensation reserve for excess claims were $54.9 million and $76.7 million, as of December 31, 2023 and December 25, 2022, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $53.8 million and $75.2 million as of December 31, 2023 and December 25, 2022, 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 31, 2023:


(in thousands)
2024	$	44,866
2025	23,494
2026	13,764
2027	9,193
2028	6,705
Thereafter	43,566
Sub-total	141,588
Excess claims (1)	54,927
Total	$	196,515

(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 $20.1 million, $29.8 million and $39.8 million was recorded in cost of services on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, respectively.