Posted By:

Kathy Eastman on August 20, 2015

3 Things You Need to Know About Workers’ Comp Coverage in Multiple States

Nearly all states in the U.S. require employers to carry workers’ compensation insurance coverage. And while workers’ comp can be confusing enough when operating in just one state, it can be even more perplexing when you’re getting coverage in multiple states
. If you have employees who frequently travel to other states, it’s important that you’re aware of three key facts.


1) There are Four Monopolistic States

While the vast majority of states don’t require employers to have immediate state-specific insurance coverage, there are four that are classified as monopolistic states. These are “jurisdictions where an employer must obtain workers’ compensation insurance from a compulsory state fund or qualify as a self-insurer (as is allowed in two of the jurisdictions).” These four states include North Dakota, Wyoming, Ohio and Washington.

However, it’s necessary to point out that Ohio and Washington will allow you be self-insured as long as you meet the financial requirements in those states. But with these financial requirements being steep (e.g. Washington requires companies to have at least $25 million in assets), being self-insured probably isn’t in the cards for most small to mid-sized companies.

The bottom line is that if you will have employees traveling to any of these four monopolistic states, you’re most likely going to have to obtain state-specific insurance right off the bat.


2) Payroll Should Be Broken Down State By State

It’s critical that whoever handles your payroll makes sure to keep track of how much is earned in each state. Regardless of where you’re headquartered at, you’ll still need to break down payroll for every single state you operate out of. This is necessary because an insurance company is unlikely to pay claims from any unreported states.

Even if your overall payroll data is flawless, you’re probably going to run into trouble if you don’t know how much was earned in each specific state. Accordingly, you need to ensure that you always maintain accurate out-of-state payroll at all times because it can create some huge headaches if there’s an accident and you need to file a claim.


3) Coverage Depends Upon How Long Employees Are in a State

Finally, you need to know that states differ in terms of the length of time before an out-of-state employee is required to get state-specific workers’ comp coverage. The time frame can vary anywhere from five to 30 days before an in-state policy must be in place. For this reason, you should always be aware of what time frame you’re dealing with when an employee travels to another state.

If it’s quick weekend trip, you probably don’t have much to worry about. But if they’re going to be there longer than a week, you’ll definitely want to look into the details. This resource from the National Federation of Independent Business is extremely helpful and should provide you with all the information you need to answer any further questions.

When you’ve got employees in multiple states, it can put you in a difficult position when it comes to getting worker’s comp coverage. However, with enough research, you can keep everyone covered and protect your business from liabilities.