WORKERS' COMPENSATION INSURANCE AND RESERVES

3 Months Ended

Mar. 31, 2024

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 business 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 March 31, 2024. The weighted average discount rate was 2.5% and 2.4% at March 31, 2024 and December 31, 2023, 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)	March 31, 2024		December 31, 2023
Undiscounted workers’ compensation reserve	$	205,717	$	214,611
Less discount on workers’ compensation reserve	17,870		18,096
Workers’ compensation reserve, net of discount	187,847		196,515
Less current portion	41,303		44,866
Long-term portion	$	146,544	$	151,649

Payments made against self-insured claims were $10.3 million and $11.9 million for the thirteen weeks ended March 31, 2024 and March 26, 2023, 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 thirteen weeks ended March 31, 2024 and fifty-three weeks ended December 31, 2023 were 4.3% and 4.1%, respectively. The discounted workers’ compensation reserve for excess claims was $53.0 million and $54.9 million as of March 31, 2024 and December 31, 2023, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $52.0 million and $53.8 million as of March 31, 2024 and December 31, 2023, respectively.

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 $5.3 million and $4.8 million was recorded in cost of services on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen weeks ended March 31, 2024 and March 26, 2023, respectively