Partners

October 28, 2022

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

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 another state to your workers’ comp policy?

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. 

What do you need to know?

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.

How does Colorado define “extraterritorial”?

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.

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 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.)

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

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. 

Does Colorado offer reciprocity with other states?

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.

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 is to spend more than six months 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.

Pinnacol agent sell sheet

Download our sell sheet to help customers better understand all the benefits of being insured by Pinnacol.

Download
arrow_forward