October 28, 2022
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.
A critical step in determining whether you’ll need to modify the workers’ comp policy to cover an employee working out-of-state is to understand the requirements within the state where the work will be performed. Each state has its own workers’ compensation law and our customers will want to ensure they are complying with those laws, whether they are working on a temporary contract or setting up a permanent location.
It is important to know that there are a few limited protections in place if a Colorado employer is sending a Colorado employee out-of-state on a temporary basis to perform work. First, the workers' comp act includes an "extraterritorial provision," defined below. Second, each of our policies includes a "Limited Other States Endorsement," a sample of which you can view here, that explains possible reimbursement to a policyholder based on specific conditions related to an out-of-state injury. Last, some states offer reciprocity, so it is important to understand reciprocity and how it may apply.
Colorado defines “extraterritorial” 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 in the statute allows a Colorado employee to temporarily work for six months in another state unless extended with permission from the Division of Insurance.
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 a review process in place for Colorado employers working there temporarily, performing non-hazardous types of business operations. (For more information, please refer to the reciprocity resource provided below.)
Reciprocity is an agreement between two states that they will mutually accept the other state’s extraterritorial provision, as defined above. However, not all states reciprocate with other states’ extraterritorial provisions. The best way to determine if there is a reciprocity agreement in place is to contact the workers’ compensation governing body within the state in which our customer is performing work.
Colorado is generally a non-reciprocating state. Therefore, the exemption for reciprocity is only with the contiguous states, not any other state, and even then, certain criteria must be met for there to be true reciprocity.
Read more about Colorado’s reciprocity with contiguous states here.
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:
If you have additional questions or need more information, please don’t hesitate to reach out to your Pinnacol underwriter.