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Important conversations agents should have with customers whose employees are working in other states

June 28, 2021
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Many of our mutual customers have employees working out of state. Here are some important questions and answers to consider when having discussions with customers about whether they need to adjust their workers’ comp policy to protect employees working in other states.

How do you know if you should add an employee’s state on your workers’ comp policy?

A critical step in determining whether you’ll need to modify the workers’ comp policy to cover an out-of-state employee is to become familiar with what’s called an “extraterritorial provision” or “Limited Other States Endorsement.” This part of the policy explains whether there is reciprocity with other states. Take a look at a sample of Pinnacol’s Limited Other States Endorsement here.

How does Colorado define “extraterritorial” coverage?

Colorado defines extraterritorial coverage this way:

“Extraterritorial is the extension of state workers’ compensation law to provide benefits for workers hired in a particular state but injured while working in another state. There is usually a maximum placed on the amount of time an employee can spend outside the state of hire and still file a claim in that state.” (Colorado’s provision allows a Colorado employee to temporarily work for six months in another state.)

Are there exclusions to the limited other states endorsement?

Yes. There are exclusions to the limited other states endorsement. A limited other states endorsement is not applicable in monopolistic states such as North Dakota, Ohio and Washington. Wyoming has an exception as a contiguous state for non-hazardous types of business operations. (For more information, please refer to the reciprocity resource provided below.)

What is “reciprocity,” and how do you know which states reciprocate with other states?

Reciprocity provides guidance and determination of benefits when an employee, primarily in another state, is injured on the job. However, not all states reciprocate with other states’ extraterritorial provisions.  

Does Colorado offer reciprocity with other states?

Colorado is an overall non-reciprocating state. Therefore, the exemption for reciprocity is only with the contiguous states, not any other state.

Read more about Colorado’s reciprocity with contiguous states here.

When should you consider making changes to your workers’ comp policy?

If an employee is a Colorado resident working in another state, review these questions to determine whether you need to make changes to your workers’ comp policy:

  • Is there reciprocity with the other state?
  • If not, there needs to be coverage in the other state.
  • Is the employee doing significant work in the other state (work expected to last for more than six months)?
  • If the employee has more than six months of time spent temporarily working in another state, you’ll need coverage in the other state.
  • Is there nonsignificant work in the other state?
  • Some states require that if any work is performed in their state, those out-of-state employees need coverage regardless of the duration of time (e.g., NY, NJ).
  • If the work is nonsignificant and the state is reciprocal with the Colorado policy, and work is being done within the six-month extraterritorial provision, you do not need to add another state’s coverage to the policy.

If you have additional questions or need more information, please don’t hesitate to reach out to your Pinnacol underwriter.

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