Does workers’ compensation insurance coverage automatically follow employees when they travel or work out of state? Nope. Workers’ compensation laws are state-specific. So are workers’ compensation insurance policies. An employee injured while working out of state will not have workers’ compensation coverage unless that state is identified in Items 3.A or 3.C. of the policy’s Information Page.
Item 3.A is used to identify the state or states in which the employer is operating on the policy’s inception or renewal date. Item 3.C. identifies other states in which the employer plans or expects to be working, but the work will not begin until after the policy’s inception or renewal date.
How do you know which states should be listed in Item 3.A? This can be simple for employers operating entirely and exclusively in one state. It can be tricky for employers with operations in or connections to multiple states. There aren’t any fixed rules, but various factors can be considered to help determine which states need to be listed in Item 3.A. For example, Item 3.A states may include:
- The state of incorporation;
- The state of domicile (principal place of business or home office);
- States with branch offices, regional operations or subcontractors;
- States in which employees have significant contact (often involves employers located near state borders);
- States in which employees regularly work or temporarily work more than a specific number of days during the policy year;
- States with no or limited workers’ compensation reciprocity;
- States in which employees are contracted for hire; and
- States in which employers have multiple employees
In addition to identifying states in which an employer plans to work in the future, Item 3.C. should include bordering states in which employees may reside and states employees may occasionally visit or travel through. Remember, when work actually begins in a 3.C. state, employers must notify the insurance company at once.
Properly identifying states that need to be listed in your workers’ compensation insurance policy is critical. The consequences for failing to list a state under either Item 3.A. or Item 3.C. can be severe for employers and employees alike.
Please contact us if you have any questions about out-of-state workers’ compensation insurance coverage. You can subscribe to our newsletter to receive regular insurance and risk management informational updates.