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How to Provide Workers’ Comp Coverage for Out-of-state Employees

by Byrne Anderson
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Your employees may have different needs for workers’ compensation. For example, you may also have some out-of-state employees who need coverage, while some of your contract workers apply for exemptions.

No matter what industry your business operates within, understanding your workforce’s unique workers’ compensation is crucial. Otherwise, you will only provide a one-size-fits-all workers’ compensation plan that doesn’t consider the different needs of out-of-state employees. If you don’t comply with state-specific workers’ comp laws and get caught, you may face heavy fines or even jail time.

Understanding Workers’ Comp Laws

Because workers’ compensation is set at the state level, the minimal requirements your business must offer will vary by state. When researching workers’ compensation laws for your state, you should first determine how your state fund for workers comp operates.

States provide employers and employees the ability to purchase state-sponsored workers’ compensation. There are two distinct types of state funds: monopolistic and competitive.

In states with a monopolistic state fund, all businesses requiring workers’ comp coverage must purchase it from the state fund. Conversely, in states with competitive funds, businesses have the choice to shop coverage from private insurers.

Regardless of where you purchase workers’ comp, the premium you pay will reflect your business’s specific liabilities. Private insurance companies take into consideration the number of workers you employ, your total payroll, your industry classification code, and your experience modifier.

While searching for workers’ comp coverage, it’s crucial to know how many out-of-state workers you have and how many will need workers’ compensation. Having this information can help you determine if you need to focus your search on finding a policy that will adequately cover your out-of-state employees or if those employees require independent coverage.

Multi-state Workers’ Comp Plans

If you have a lot of employees from outside your state of operation, you’ll need to review their states’ compensation laws. As their employer, it’s your job to ensure these employees are provided adequate workers’ compensation coverage.

Many states have similar workers’ compensation laws. If your employers are from states with similar laws, you may be able to use a national provider specializing in plan writing for employees from multiple states.

As more businesses opt to hire contract or out-of-state employees, options from national providers have increased. These agencies specialize in navigating the various factors and regulations that come into play when writing a workers’ compensation plan with employees from different states.

If you’re unsure whether your out-of-state employees need workers’ compensation or are eligible for an exemption, a national provider can also help you make that determination. Providers can sift through common determining factors, such as which states are in question, how many hours they work, the industry they work in, and which state they perform most of their work. From there, they can help you determine if your employees need coverage and write a policy tailored to various states’ requirements.

Insuring Individuals

When you have employees from states with a monopolistic state fund, a national policy may not work for your business. Since monopolistic states require workers’ compensation to be purchase from a state provider, you may have to insure workers individually.

Insuring individuals requires you to purchase independent workers’ compensation policies. Before purchasing individual policies, first, determine how many policies you will need. Besides employees from monopolistic states, you may also need policies for employees whose state requirements are too different from other states to be included in a plan from a national insurance provider.

Once you know how many employees will need individual plans, you can begin searching for plans that will satisfy their home states’ compensation regulations. Most insurance agencies offer separate policies. As such, you should be able to have a few options to choose from before settling on a provider and plan that best fits your workforce’s needs.

Workers’ Compensation and Your Workforce

No two workforces will have the same workers’ compensation needs, especially if they employ individuals from different states. While your in-state workers will most likely have their workers’ compensation requirements covered by a standard policy, your out-of-state employees may need other policies or be eligible for exemptions. Make sure to keep the needs of all your employees in mind while shopping for a workers’ compensation policy to ensure that your business is appropriately ensuring all of its employees.

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