Author: Chris Boggs
One day COVID will be a memory; however, some of changes in work options may continue, maybe into perpetuity. One is the option to work from home – or anyplace the worker desires.
Until COVID, the majority of “office" workers were required to regularly be present in a central office location. Whether the requirement was daily, three-days-a-week or even once a week, the employees' presence in the office was required.
COVID nixed this requirement for an extended period. Working from home, previously limited to just a few workers, became the normal operating procedure for millions of previously office-bound workers.
This change in venue created unexpected workers' compensation issues. The first was the need to consider the employee's state of residence within the workers' compensation coverage grant.
Because work comp is state based, the policy responds only when a state is specifically listed as either a 3.A. (primary) state or granted protection as a 3.C. (secondary) state, which may or may not require a specific listing depending on the insurance carrier.
Primary or 3.A. status is required when:
- Gaps exist between the extraterritorial provisions of the home state and the reciprocity allowances of the state to which the employee travels to work temporarily; or
- There are on-going (not temporary) operations in a state.
Deciding which state or states require(s) listing as a 3.A. state is easy when the employees are based in a single location – such as an office building – until COVID-19 complicated the issue.
Single Location Employees
When employees work at a single location such as an office location, 3.A. assignment is easy. Regardless where the employees live, only the state in which the operation(s) is/are located must be considered when extending status as a 3.A. primary state.
Even if the employer is located near a state line and has employees travelling across the border to get to work the Coming and Going Rule allowed the employer to ignore the employee's state of residence for workers' compensation purposes. Traditionally the coming and going rule holds that injuries suffered traveling to or home from work, or even while going to and returning from lunch, are not compensable.
The logic behind the rule is that the employee is not furthering the employer's interest or serving the business' need while travelling to or home from work; the employee is serving his or her own needs (the need to have a job and earn a living).
Because of the coming and going rule, even when a location-specific employee lives in another state, the state of residency is not required to be listed as a 3.A. state. The employees are assigned to the operational location.
COVID-19 may have complicated or even negated the idea of the coming and going rule. Historically employers could “ignore" an employee's state of residence, but COVID-19 pushed employees out of the employer's location and required them to set up operations in their home. Now the state of residence matters.
When employees work from their homes located in another state, there is a strong argument that there are now operations in the employee's state of residency. Whether the employee's home state needs to be listed as a 3.A. state is a function of permanency and the extraterritoriality and reciprocity provisions of the two states in question (the employer's operational state and the employee's state of residency).
If the employee likes working from home and the employer sees no drop in quality and quantity of work (maybe even an increase in both), working from home may become permanent. If these home-based “operations" become permanent, the employee's state of residence should or must be included as a 3.A. state on the work comp policy.
A more detailed explanation of the extraterritoriality and reciprocity issues created by the now home-based workers can be found in the article, “Workers' Compensation, COVID-19 and 3.A. States." Specific examples are found in this article to help agents explain the issues to clients.
A Possible New Problem – “Workcation"
As employees have become accustomed to the freedom of home-based work and as employers have simultaneously accepted home-based employees, a new workers' compensation problem has arisen – “Workcation."
Although the concepts of “work" and “vacation" seem mutually exclusive, the combined concept of “workcation" is now a “thing." The employee may take the “work-from-home" opportunity on the road, so to speak, travelling to a vacation destination or to stay with family or friends in another state, all without interrupting their workflow.
A New York-based employee may decide to go to Florida for a couple weeks. While there, the family “plays" while the employee works remotely. The employee still works the full day, they just aren't at home.
Does this “workcation" create problems with the workers' compensation coverage? Is this a different problem than the employee who lives across the state line that is now working from home?
The “Workcation" State
Workers' compensation, as stated earlier, is a state-based system. Agents must understand the concepts of extraterritoriality and reciprocity to prepare for the problems created by a state-based system. Every state applies its own rules to the issue of workers' compensation, particularly in regard to workers who enter the state temporarily.
Fortunately, the reality of extraterritoriality and reciprocity does not seem to apply in “workcation" scenarios. However, understanding extraterritoriality and reciprocity is still important. A detailed discussion of this important topic is available from many places in the VU:
- A state-by-state breakdown of the extraterritoriality and reciprocity regulations (linked here);
- A 41-page Risk & Reality Report entitled “Untangling the Work Comp Mess - When Employees Travel" detailing extraterritoriality and reciprocity; and
- A webinar detailing extraterritoriality and reciprocity. The above referenced Risk & Reality Report is based on this webinar.
Does the state to which the employee travels for a “workcation" need to be listed as a 3.A. primary state for workers' compensation coverage to apply?
“Workcation?" No Problem: The No Problem, Problem
Traditionally, the concepts of extraterritoriality and reciprocity involve direction and control. The question around whether workers' comp follows the employee into another state arises because the employer directed the employee to enter another state to perform operations on behalf of the employer. The worker goes at the request of the employer.
In a “workcation," the employee is not directed to go to another state to work. The employer may or may not know where the employee is.
Without direction and control, it seems unlikely the state from which the employee is working will or can assert that it has jurisdiction over the worker. Neither can the worker state that the employer is the proximate cause of their being in the other state (“I would not have been here were it not for my employer sending me").
In the absence of employer direction and control, the state of “workcation" does not seem to require assignment as a 3.A./primary state. If 3.C. is written broadly, even an “oops" is covered.
Employees who live and are now working in another state must be addressed by the workers' compensation policy. However, an employee who travels for a short time to another state on their volition for a short-term “workcation" does not appear to require any change to the workers' compensation policy.
If the employee calls and asks, just tell them to have a good time and bring presents.
Disclaimer: Because workers' compensation is subject to 51 jurisdictional interpretations, this should not be relied upon as legal advice. Each situation differs based on the facts of the case.
Last updated: April 2, 2021
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