Workers who travel out of their state or country of hire to perform work on behalf of their employers create liability exposures. This is due to complex laws, administrative rules and regulations that deal with workplace injuries and diseases across the U.S. and abroad.
Employers should carefully evaluate the destinations of their employees, as well as their insurance coverage, to make sure they have incorporated the proper workers compensation and employers liability protection into their risk management programs.
Extra-territorial workers compensation claim issues can arise when employees perform work away from their normal base of operations, be it the office, factory or their home. If they travel to other states, territories, or foreign countries on behalf of the employer, the potential for work-injury claims emanating from the legal jurisdiction of the temporary work site is real.
If a key employee is required to travel overseas and becomes seriously injured while working, the cost to relocate the individual back to the U.S. could cost upward of $250,000. And, the U.S.-based workers compensation carrier for the employer may not be willing to cover medical expenses and lost wage benefits for the claim, which can be substantial.
To complicate matters here in the U.S., the states of Ohio, Washington, North Dakota and Wyoming operate under monopolistic workers compensation statutes, meaning the employer must purchase insurance coverage directly from the state governments for employees conducting business in those states.
Puerto Rico, a common destination for business-related travel by U.S. companies, also has a Monopolistic Workers Compensation statute. And Canadas 17 provinces and territories each have a workers compensation board, all with their own slightly varying rules, procedures and requirements.
Even if a U.S. business purchased workers compensation coverage for their employees in compliance with local state law, the employer is required to register the company and pay Canadian insurance premiums for employees who work six to 10 days per year in that country in order to meet the substantial connection to the province doctrine.
Moreover, endemic disease and repatriation expense are two foreign workers compensation coverages that are often overlooked by employers. Endemic disease coverage protects employees who are exposed to or contract a disease that is native or particular to a certain country or region of the world. An example is malaria. Repatriation expense covers the cost to bring an ill or injured employee back to the U.S. for treatment as well as transportation expenses for a deceased worker.
The cost to add these endorsements to a workers compensation policy is generally a few thousand dollars per year, which is a minor expense in comparison to self-insuring these exposures back to the employera potential cost of hundreds of thousands of dollars or more.
We live in a globalized economy where employee mobility is the norm. The employers task is to ensure adequate workers compensation and employer liability insurance coverage that protects everyones interests. Working through extra-territorial workers compensation exposure issues at the micro level will help to eliminate serious coverage problems at the time of need.
Brian McDermott is vice president, P&C client management, Corporate Synergies.
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