MGA

Tips for Navigating Workers Comp in Multiple States

Nov 30, 2023

Working in multiple states poses a risk for employees protected under general workers’ compensation insurance products. Many of these products are designed for specific states and sometimes specific industry settings. This leaves many Americans without protection. Fortunately, multi-state workers’ comp insurance offers a solution.

Statutory Variation in Workers Comp Across State Lines

Within the workers’ comp insurance products across state lines, there are differences in requirements and coverage types. Some of the major differences you’ll notice include:

  1. Eligibility criteria: Usually, workers’ compensation requires a worker to be employed by a covered employer (not an independent contractor), the claim must be work-related (occurring on the job), employers must be notified of the issue within 30 days, and a claim is filed. With multi-state workers’ comp, there is usually a choice in which state you file (consider which state offers the best outcome). The state you file in may need to be the state in which the incident occurred. A reciprocity agreement may be part of the policy.
  2. Varying benefit structures: Benefits included in workers’ compensation packages may include some or all Employee Assistance Programs (EAPs), disability coverage, life insurance, stock options, Paid Time Off (PTO), contribution plans like 401Ks, and health benefits. Benefits vary from state to state.
  3. Distinct statutory regulations: Everything from reporting times to dispute resolution procedures and benefit levels is regulated differently from state to state. Working with a knowledgeable insurance writer or wholesaler helps navigate these differences.
  4. Coverage requirements: Different employers must follow laws specific to their industries and states. Employees may require workers’ compensation from in-state at one job, while another allows out-of-state coverage. Requirements vary.
  5. Reporting and filing processes: The reporting and filing process includes completing forms unique to the incident, industry, and state. An employee may need to fill out forms designated by the state where an incident occurred or by the state where the main office for their place of employment exists.
  6. Waiting periods: Waiting processes vary by state. Some have no waiting period, while others may require weeks of waiting.
  7. Different medical provider networks: Not all workers’ compensation programs allow for all medical provider networks. When dealing with multi-state workers’ comp insurance, it’s important to note which providers you are covered byh and where.
  8. Benefits duration: The duration of benefits also fluctuates depending on policy and state. Some benefits may last longer in one state and end sooner in another.
  9. Employer responsibilities: Like everything else, employer responsibilities aren’t the same in every state. Most employers are responsible for compliance with state laws, keeping records of claims, cooperating with the claims process, and maintaining safety in the workplace. Multi-state workers’ comp insurance (as long as through a single employer) should work on the same level wherever you go, apart from potential state law differences.
  10. Third-party claims: If a third party injures an employee, separate lawsuits can be filed. Benefit coordination varies between states. Legal assistance might be required in a multi-state third-party claim unless the policy is clear.
  11. Exclusivity of remedy: Exclusivity of remedy is the waiving of rights to sue a company for injury or death if the company provides workers’ compensation. This type of no-fault system may not be eligible in all states.

Broken Leg Workers Comp

Monopolistic State Considerations

A monopolistic state requires employers to use state funds for workers’ compensation coverage. There is no purchasing through private insurers. This has pros and cons. On the upside, the coverage is regulated. On the downside, there’s no customizing coverage to your client’s needs.

If expanding into a monopolistic state, it’s important to know whether multi-state workers’ compensation policies are valid. Some monopolistic states include Washington, North Dakota, Wyoming, and Ohio.

Workers Comp Class Code Considerations

Workers’ compensation insurance relies on the accurate classification of employee roles and job titles. It directly impacts compliance and premium costs associated with policies.

One issue with class codes is state variation. Every state uses its own rules and codes, even for the same job type. For multi-state workers’ compensation insurance claims, this makes things complicated.

Along with the variance between states, there are other factors impacting class codes, including:

  • Claim history
  • Associated risks
  • Job type
  • Premiums

Misclassification risks include legal action, financial repercussions like fines and penalties, and the potential for inadequate coverage.

remote-worker

Dealing with Remote Workers

There is remote work to consider, along with multi-state workers’ compensation insurance for workers at physical worksites. Some potential coverage issues include remote work done for a company in one state while physically residing in another. State law might dictate how workers’ compensation is covered in these instances or leave it up to the insurer or insured.

The best way to ensure your remote employees are fully covered is to work with a knowledgeable insurance writer or wholesaler. Complex insurance products require a unique set of expertise and experience. Working with someone in the know guarantees streamlined coverage and accuracy.

Tracking remote workers is another way to ensure premium accuracy in coverage. Keep tabs on where work is done, how much work is done, and how long workers are in specific states while completing projects.

Dealing with Subcontractors

Subcontractors often work between cities and states. As such, subcontractor insurance is integral and sometimes falls under the category of multi-state workers’ comp insurance. For accidents or errors in subcontracting, proper insurance is required by each subcontractor. Usually, this is the subcontractor’s responsibility rather than the business.

Managing subcontractor compliance is easier with customizable insurance products. Avoid potential liability issues by working with an experienced wholesale insurance provider.

Interstate Ratings and Experience Mods

Experience mods differ depending on the state because of unique rating methods and state regulations. Safety and claim records may not show consistency in assessments for multi-state coverage.

Every state uses a rating bureau assessment for mod calculations. Accurate risk assessment requires a keen knowledge of these methods and entities. Document measures, compliance tactics, and state regulations to positively sway mod calculations amidst discrepancies.

Work closely with clients and insurers to track any mod changes and follow up immediately on inaccuracies.

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Traveling Employees

When employees are traveling, identifying potential coverage gaps is key. Check that employees are covered by workers’ compensation in the states they are traveling to, and through. Monitor travel-related incidents as well as incidents occurring on the job.

Compliance with state-specific rules is essential for a streamlined claim process.

Pay Attention to Regulatory Compliance

Regulatory compliance is a major factor throughout the workers’ comp claim process. Some ways to adhere to regulations include:

  • Being informed about compliance regulations in each state.
  • Using compliance software for fast reporting.
  • Providing regular communication between staff, management, and insurer.
  • Proactively monitoring compliance across state borders.

Avoid Worker Misclassification Risks

Common risks for misclassification include:

  • Fines and financial penalties
  • Legal Liability
  • Risk of audit
  • Reputational damage


Some of the penalties you can expect include:

  • Fines: Fines ranging from hundreds to thousands of dollars can follow a misclassified worker claim.
  • Back Pay: Businesses may be responsible for back pay, including benefits and wages.
  • Interest: Businesses may also be responsible for interest on unpaid premiums.
  • Legal costs: Any expenses resulting from legal action due to misclassification.

Steps to take to reduce the risk of misclassification include working with an experienced broker or wholesaler and being aware of state-specific guidelines. Again, compliance is vital.

Seeking Professional Guidance

Working closely with a wholesale insurer simplifies the process for multi-state workers’ comp insurance products. Retail agents working with wholesalers have access to a wide network of professionals within the wholesaler’s network, including niche insurance writers who can customize products for their clients.

Multi-state coverage is a complex area of insurance. A wholesaler finds carriers, curates policies through insurance writers, and facilitates the creation of niche multi-state insurance products for you to bring to your client.

For more information on Novatae and our approach to wholesale multi-state workers’ comp insurance coverage, call us today.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.