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Extraterritorial Workers’ Compensation Coverage Frequently Asked Questions

January 06, 2022

Illustration on dark brown background of paper cutouts of an umbrella over a person with text below: Workers' CompensationTelecommuting presents challenges for workers’ compensation when the remote location is in a state other than Minnesota. An employee who is injured outside of Minnesota is only covered under the Minnesota Workers’ Compensation Act if the Act’s requirements for “extraterritorial application” or “temporary out-of-state employment” are met.

Q: What does extraterritorial application mean?

A: Minnesota Statutes, Section 176.041 Subdivison 2 defines the term “extraterritorial application” as follows: “If an employee who regularly performs the primary duties of employment within this state [Minnesota], receives an injury while outside of this state in the employ of the same employer, the provisions of this chapter shall apply to such injury.”

Q: What does temporary out of state employment mean?

A: Minnesota Statutes, Chapter 176.041 Subdivision 3 defines the term “temporary out-of-state employment” as follows: “If an employee hired in this state [Minnesota] by a Minnesota employer receives an injury while temporarily employed outside of this state, such injury shall be subject to the provisions of this chapter.”

The “extraterritorial” provision applies and, therefore, Minnesota workers’ compensation coverage applies to situations where the employee performs his or her primary duties within Minnesota but an injury occurs while that individual is performing duties for its Minnesota employer on a short, nonroutine basis out of state. Examples include attending a job-related conference, traveling to another state to pick up an inmate for extradition or responding to a national emergency, such as hurricane relief and cleanup.

During the governor’s work-from-home orders, employees working from home in a state other than Minnesota met the definition of ”temporarily employed outside of this state.”

Workers’ compensation coverage becomes problematic for employers that seek to make telecommuting permanent when they have employees whose permanent remote work locations are out of state. MCIT is not licensed or statutorily authorized to provide workers’ compensation coverage under another state’s laws.

Q: Are telecommuting employees covered for workers’ compensation by MCIT if they live in Minnesota?

A: Yes.

Q: What is the material change in covering telecommuting employees who have been covered since joining MCIT?

A: Although many employees have lived outside of Minnesota while working for an MCIT member, their homes were not considered their worksites. Minnesota workers’ compensation law covers employees who live outside Minnesota and work within Minnesota. It is the location of a home office when it is the employee’s permanent workplace that is relevant to MCIT’s inability to provide workers’ compensation coverage.

Q: Can workers’ compensation coverage or a policy be purchased by MCIT members to cover their employees working in other states?

A: Yes but not through MCIT.

Q: Why does MCIT not purchase coverage for employees working in other states?

A: Workers’ compensation must be provided by the employer. MCIT is not the employer of its members’ employees. Each member with workers permanently telecommuting from a location in a state other than Minnesota should purchase workers’ compensation insurance for those employees.

Q: Why is permanently working from a state other than Minnesota an issue?

A: An employee can select the jurisdiction he or she wishes to file their claims based on these principles:

  • In the state their work is principally localized
  • In the state where they were injured
  • In the state where they live

If an employee permanently works outside of Minnesota (e.g., from a home office in Wisconsin), the employer that is a member of MCIT does not have coverage through MCIT in another state. If a claim is filed by that employee and the employer does not have workers’ compensation coverage in that state, there can be fines or penalties.

Q: What should members do if they have more questions?

A: If it has been determined that a member has employees who will be permanently working out of state, the member needs to contact an insurance agent or insurance company that provides workers’ compensation coverage in each state where the member has employees working, or contact an insurance agent who can accommodate the member’s needs.