If your business only has a physical location in one state, you might assume that’s the only state that needs to be listed on your workers’ compensation policy. However, that isn’t always the case. There are multiple situations in which other states might come into play, and this needs to be reported to your insurance company.
For example, many employees choose to live in one state and work in another, meaning they make the daily commute across a state border. Other employees may work remotely or travel outside of the state for business purposes. Regardless of the specific situation, when your workers cross state lines, there are important workers’ compensation issues to consider.
Workers’ Compensation Overview
Workers’ compensation helps protect both employers and employees when a work-related injury or illness occurs. This coverage provides benefits to employees who are hurt on the job. Workers’ compensation may help pay for:
- Medical care related to occupational illness or injury
- Lost wages during recovery if the employee is unable to work
- Rehabilitation costs, such as physical therapy or vocational training
- Death benefits to dependents if a workplace injury or illness results in death
For employers, workers’ compensation reduces financial exposure by helping to cover expenses such as these. Additionally, depending on where your business operates, coverage may be required by law.
State Workers’ Comp Requirements
Each state establishes its own workers’ compensation insurance laws, and there can be significant differences from state to state. For example, the answers to the following questions could vary depending on location:
- Which businesses are required to purchase workers’ compensation coverage?
- What coverage limits do businesses need to carry?
- Can employers purchase insurance from a state fund, private insurance carriers or both?
- What benefits are injured workers entitled to?
- Which causes of injury or illness are compensable?
- How long do injured workers have to file a claim?
Another key issue is jurisdiction. States establish rules for when an injured worker can file a claim in that state. In some cases, two or more states may have jurisdiction for one claim.
For example, if an employee is injured in one state, but the company is in a different state, depending on jurisdictional rules, the employee might be able to file a claim in either state. Employers need to be prepared for workers’ comp claims that could fall under more than one state’s authority, including their respective differences in rules and workers’ compensation benefits.
Workers Living in Another State
Some employees may work in one state and live in another, and this can affect which states have jurisdiction for potential workers’ compensation claims.
For example, some employees who live out-of-state may work from home, which means that they are also working out-of-state. This out-of-state remote work could happen regularly or occasionally. As the COVID-19 pandemic showed us, remote work arrangements can also happen unexpectedly and out of necessity.
It’s important to note that if an employee’s home state has workers’ compensation requirements that are different from the employer’s state, additional filings or insurance policy endorsements may be needed to stay compliant. Talk to your insurance advisor to get guidance on how to stay compliant with all relevant regulations.
Workers Traveling to Another State
Another issue can occur when employees travel out-of-state to attend a business meeting or event. For companies that are domiciled near a state border, this could happen regularly and informally. For other businesses, interstate travel may be less common, and, when it occurs, it might be sudden and unexpected.
Some workers’ compensation policies may include limited extraterritorial coverage for employees who travel out-of-state for business purposes and for a short period of time. However, coverage may not apply in every situation.
One major issue that may occur involves reciprocity. One state may not accept another state’s extraterritorial coverage, or one state’s coverage may not satisfy another state’s requirements.
Are your operations protected?
Don’t wait until an injury occurs to make sure you have appropriate coverage. Higginbotham can help to review your commercial insurance policies and risk management strategies to help ensure your business is protected and compliant.
To learn more, talk to one of our workers’ compensation insurance professionals today.
