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Any business owner knows that having workers’ compensation insurance is essential to protecting their employees and organization. However, if a business has employees working in multiple states, managing workers’ compensation can get a little tricky. In this blog, we will explain everything you need to know about multi-state workers’ compensation insurance to ensure your business is properly protected. 

Different States, Different Regulations

The first thing that should be noted is that workers’ compensation regulations differ from state to state. It’s essential for employers to understand those differences to ensure that they adhere to any workers’ compensation laws. Some examples where state policies may differ include:

  • The minimum number of employees that triggers the requirement for workers’ comp
  • Whether coverage is mandatory for independent contractors or casual employees
  • Possible exemptions or exclusions to workers’ comp. coverage
  • Restrictions on whether the employer or employee selects the health provider for work-related injuries/illness
  • Drug laws and drug testing
  • Rates
  • Claims payments

Organizations with employees in multiple states hold the responsibility of understanding workers’ compensation laws in all states of business operations. 

Coverage for Temporary Out-of-State Employees

A common question asked in the insurance world is “What if my employee gets injured while temporarily located out-of-state?” If an employee has a work-related injury while on business travel in a state where the employer doesn’t have workers’ compensation insurance, the employee has the right to file a claim in the state where the injury occurred. Employers can be subject to fines or penalties, including the actual cost of the claim.

An option for businesses with employees who frequently travel to other states is purchasing extraterritorial insurance. This is also known as an “other state coverage” and covers temporary out-of-state work.

Additionally, many states allow reciprocity agreements that allow the injured employee to receive the same benefits as if the injury took place in the employer’s home state. In some cases, reciprocity agreements don’t provide full benefits, but they are still a good option for temporary out-of-state employees. 

Navigating Workers’ Compensation as a Multi-State Business

If you need workers’ compensation coverage for employees operating in multiple states, the following tips will help get you started on the right track.

Identify Where Your Employees are Located

Before purchasing any type of workers’ compensation insurance, determine whether your employees will be working in another state and if so, for how long. State laws may require you to provide workers’ compensation benefits for out-of-state employees depending on how long they will be located there. 

If your business employs workers in other states permanently, you will be required to get a workers’ compensation policy that provides coverage in their respective states. Ensure that your insurance carrier is licensed to sell coverage in all states. 

Get Correct Workers’ Compensation Class Codes

The cost of workers’ compensation for employees working in multiple states is priced according to codes assigned to their line of work and industry. Most states use standard NCCI codes, but states such as California, New Jersey, New York, and Pennsylvania don’t use NCCI codes. 

It’s very important to get the workers’ compensation class codes correct to avoid misclassification, which can result in fines and other penalties. Even when an honest mistake is made, you may have to pay the difference between your old and new premium.

Don’t Forget About Remote Workers

Since the COVID-19 pandemic, many businesses have employees working from home in different states. No matter where they are located, they need to be covered under your multi-state workers’ compensation plan. Working from home presents unique risks that can impact what type of insurance you should carry. 

Protect Your Business With Biscayne Risk & Insurance

At Biscayne Risk & Insurance, we understand the complications of multi-state workers’ compensation insurance. Our vast experience and knowledge in the industry gives us an upper hand at protecting businesses with unique insurance needs. For more information on how we can help cover and protect your business, please contact us today to set up an appointment. 

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