An employer operating in multiple states faces the complexities of determining where workers compensation liability should be insured. Because workers compensation costs vary widely, an employer may be tempted to insure in less expensive states, such as Indiana. However, failure to carry insurance in the appropriate states - or to pay into state-funded workers compensation systems, such as Ohio, - may leave employers subject to state penalties, retroactive premium assessments, and unexpected liability.
Case Law Example
For an analysis of issues that can arise in rating a multi-state employer and retroactive premium assessments, see D.A.X., Inc. v. Employers Insurance of Wausau, 659 N.E.2d1150 (Ind. App. 1996), in which the court upheld a carrier's retroactive assessment of non-Indiana premiums against a trucking firm.
States Can Use Different Legal Tests
Air and bus lines, trucking firms, and employee leasing agencies are examples of operations that face potential liability in multiple states. For example, a Texas resident who enters into a written or implied employment contract in Ohio, utilizes a base terminal in Indiana, and is injured in Illinois, may attempt to pursue a claim in each of the states - the state of residence, the contract state, the state in which work was performed, the state of injury, and the state or states in which workers compensation coverage was insured by the employer.
Because states use different legal tests, the fact that one state applies its compensation act to a claim does not necessarily preclude the application of other state compensation acts. However, double recovery is prevented because workers compensation acts allow the employer/carrier to credit amounts already paid or awarded.
Some employers have attempted to select a workers compensation "jurisdiction" by asking employees to sign a contractual agreement to pursue claims in a given state, regardless of where the employee lives or where the accident took place. These contracts are questionable because rights created by most workers compensation acts cannot be signed away (for Indiana, refer to IC 22-3-2-15). Thus, employers relying on such agreements may remain liable for compensation and penalties for failure to insure in multiple states. Source: Open Lines, April, 1997; publication of WC Board of Indiana
The Indiana Code is available on the State of Indiana website at this address: http://www.state.in.us/legislative/ic/code/.
Note: Extra-Territorial Guidelines that used to be in the discontinued Premium Audit Reference Book are now in the Scopes Manual under Codes 5403, 7228 & 8742.
For temporary work, Ohio’s approach indicates that a 90 consecutive day temporary period in Ohio can be covered by the out-of-state employer’s WC policy.
The Ohio BWC web page, under the section titled “A Review of Surrounding States’ Coverage Requirements” says this about Indiana’s coverage requirements:
“Indiana claims no jurisdiction for out-of-state employers for workers’ compensation coverage. Ohio employers working in Indiana are covered by Ohio workers’ compensation regardless of duration of work in Indiana.”
The web page, under the section titled “Purpose/Benefit” says this about Ohio SB 334:
· “…requires Ohio BWC to recognize the coverage laws of another state for its employers temporarily in Ohio to the extent that state recognizes Ohio coverage for Ohio employers temporarily within that state.”
· “If the worker’s home state allows Ohio employers to enter their state and work temporarily and still be covered by Ohio BWC, then Ohio will reciprocate, that is, will allow out-of-state employers from that state to enter Ohio to work temporarily and still be covered by their home state’s workers’ compensation system, up to a maximum of 90 days.”
So, it appears that since Indiana allows an Ohio employer to be covered by its Ohio policy while working in Indiana, then Ohio will reciprocate, that is, allow an Indiana employer to be covered by its Indiana policy while working in Ohio. However, the work must be temporary since Ohio places a limit of 90 days. The 90 days provision applies
Note: We do not have a legal definition of "temporary" or what constitutes "beginning operations" in another state. This is a gray area that depends on individual circumstances that a carrier will consider.
Effective March 1, 2016, a new workers' compensation coverage insurance option is now available to eligible Ohio businesses for their employees who work in other states. The new offering will simplify workers' comp for these employers, ensuring their employees are protected without the need to manage policies in multiple states with varying laws. Effective today, employers can apply for this coverage through policies issued by the Ohio Bureau of Workers' Compensation (BWC) through a program with United States Insurance Services (USIS) and Zurich Insurance.
Link to story in Workers Compensation.com
Link to Ohio BWC web page.
Per Illinois statute, any contracting work performed in that state must use Illinois rates. Specifically, Illinois HB 228 effective 1/1/98 requires construction contractors to use “...rates of the situs where the work or project is located in Illinois...” Similar laws exist in Delaware, Florida, New Hampshire, New York, and possibly others.
New York Information
Effective September 9, 2007, all out-of-state employers with employees working in New York State are required to carry a full, statutory New York State workers' compensation insurance policy. Refer to these New York Workers Compensation Board web pages:
Indiana Assigned Risk Coverage
Additional states may not be added to an Indiana assigned risk policy.