With the coronavirus pandemic untethering many office workers from a central office location, some unexpected workers compensation issues have been created.
Even as COVID-19 cases continue to dwindle in the U.S. and life begins to look a little more “normal," some changes in work options may continue, maybe into perpetuity. One is the option to work from home—or anywhere the worker desires.
Until the coronavirus pandemic, 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, COVID-19 has nixed this requirement for an extended period and working from home may become the normal operating procedure for millions of previously office-bound workers.
This change in venue created several unexpected workers compensation issues. The first was the need to consider the employee's state of residence within the workers comp coverage grant. Because workers 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 ongoing (not temporary) operations in a state.
Deciding which state or states require a listing as a 3.A. state is easy when the employees are based in a single location. Of course, however, COVID-19 complicated this.
The Coming and Going Rule
Regardless of where the employees live, only the state in which the operation is 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 traveling across the border to get to work, the “coming and going rule" allows the employer to ignore the employee's state of residence for workers comp 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 traveling between home and work; the employee is serving their 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 a home 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, such as 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 workers 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."
A Possible New Problem: Workcation
As employees become accustomed to the freedom of home-based work and employers simultaneously accept home-based employees, a new workers comp problem has arisen in the concept of the “workcation."
Although the concepts of “work" and “vacation" seem mutually exclusive, a workcation is now a thing. The employee may take the work-from-home opportunity on the road, travelling to a vacation destination or 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 of weeks. While there, their family plays while the employee works remotely. The employee still works the full day—they just aren't at home. Does this create problems with the workers comp coverage? Is this a different problem than the employee who lives across the state line that is now working from home?
Workers comp, 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 comp, particularly with workers who enter the state temporarily.
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. In a workcation, the employee is not directed to go to another state to work.
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.
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.
While extraterritoriality and reciprocity do not seem to apply in workcation scenarios, understanding extraterritoriality and reciprocity is still important. A detailed discussion of this important topic is available from many places in the Big "I" Virtual University, including the article “Bad Things Happen When Employees Travel to Other States."
Other resources include:
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 comp policy.
If the employee calls and asks, just tell them to have a good time and bring back presents.
Chris Boggs is Big “I" executive director of risk management and education.
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.