Procedures

Summary: One area of workers compensation insurance that is sometimes a source of confusion concerns the procedures employers having interstate operations must follow when coverage is necessary in states that have monopolistic state funds. There are four such states in this category: North Dakota, Ohio, Washington, and Wyoming . Note that West Virginia dropped its monopolistic status effective July 1, 2008. The discussion that follows concerns these four states. It outlines, in summary form and on a state-by-state basis, some of the procedures that must be followed in determining whether workers compensation needs to be purchased, and, if such insurance is required, how to go about purchasing it.

Topics covered:
North Dakota
Ohio
Washington
Wyoming

North Dakota

In North Dakota, Workforce Safety & Insurance (WSI) manages and regulates an exclusive employer-financed, no-fault insurance system covering workplace injuries, illnesses, and death. WSI is the sole provider and administrator of the workers compensation system in North Dakota. The address for WSI is 1600 East Century Avenue' Suite 1' Bismarck ND 58503–0644; telephone (701) 328−3800; Fax: (701) 328−3820.

North Dakota law, with limited exceptions, requires all employers to secure workers compensation insurance to cover their full-time, part-time, seasonal, or occasional employees prior to hiring. Exceptions include licensed real estate brokers subject to certain criteria, independent contractors, farm and ranch labor, certain custom operations, household domestic workers, and employees engaged in the operation and maintenance of a place of worship. Also exempt are federal and railroad employees, children of the employer(s) who are under the age of twenty-two, and newspaper delivery personnel subject to certain criteria.

Any employer whose employment results in significant contacts with North Dakota must acquire coverage with WSI. However, if the employer's workers compensation carrier from its home state extends coverage into North Dakota, the employer must provide proof of coverage. The exception to this requirement is if the employer's home state has a reciprocal agreement with WSI.

If the home state of a nonresident employee will not provide coverage into North Dakota, and that employer has significant contacts with North Dakota, he must secure workers compensation coverage. An employer has significant contacts with North Dakota when any employee earns, or would have been expected to earn, 25 percent or more of his gross annual wage or income from that employer for services rendered within North Dakota; or 25 percent of the employer's gross annual payroll is payable to employees for services rendered in North Dakota.

The significant contact test does not apply if there is a reciprocal agreement in place between the state the employees are based out of and North Dakota. North Dakota has reciprocal agreements (with certain restrictions) with Idaho, Montana, Oregon, South Dakota, Utah, Washington, and Wyoming.

When a firm desires workers compensation insurance in North Dakota for out-of-state employees, it can either write or call the bureau giving an estimate of its expected payroll in that state and describing the type of work to be performed. The bureau will then inform the employer about the cost of insurance per classification and about the total advance premium necessary to deposit prior to the commencement of work in North Dakota.

When such a request involves a subcontractor, a certificate of insurance is issued for the prime contractor. The bureau also submits a copy of this certificate to the secretary of state indicating that the subcontractor is in good standing with the workers compensation bureau. The subcontractor is then in a position to request a contractor's license from the secretary of state thereby enabling him to commence work in North Dakota.

Ohio

In Ohio, the Bureau of Workers Compensation and the Industrial Commission administer the state insurance fund. Both agencies are governed by chapters 4121 and 4123 of the Ohio Revised Code. The address for the bureau is Ohio Bureau of Workers Compensation, 30 W. Spring Street, Columbus, Ohio 43215; telephone (614) 466-2950; Fax (614) 466-1959.

The Bureau of Workers Compensation is the administrative branch of the Ohio system of workers compensation. Its responsibility is to process all claims, keep account records, conduct audits, and to collect premiums from employers, among other duties.

The industrial commission is the adjudicative branch of the Ohio system. It hears and decides all contested claims, determines total and permanent disability, approves premium rates calculated and recommended by the bureau of workers compensation, and determines manual classifications.

All employers of one or more full- or part-time employees must either purchase insurance from the fund or qualify as self-insurers. Also subject to the law, on a compulsory basis, are employers of domestic workers who earn $160 or more in cash from a single household in any calendar quarter.

The act is also compulsory for state, county, city, township, and incorporated village officials, as well as school districts.

If an employer is a partnership or a sole proprietor, the employer may elect to include, as employees, any members of such partnership or the owner of the sole proprietorship. It is important to note, however, that the employer must provide written notice naming the persons to be covered. No partner or proprietor is considered an employee until such notice is made and acknowledged.

Nonresident employees, who are covered by workers compensation insurance in their own state, are exempt from the provisions of the Ohio act for a maximum period of ninety days. After that period, the employer must purchase insurance for its employees from the Ohio fund. However, any nonresident employer who hires employees from within the state of Ohio for work in that state must purchase coverage from the Ohio fund.

When an employer desires workers compensation insurance in the state of Ohio, it must request an application (form U-3) from the underwriting section of the bureau or from any one of its sixteen district offices.

To insure proper handling of its account, an employer must be sure its application adequately describes the operation for proper classification. The employer must also report its payroll according to the correct classification. The coverage is effective on the business day that the employer's check is received by the bureau.

When coverage begins, the employer must make an estimate of payroll for eight months. The bureau will then apply the rate to the estimate and bill the employer for that amount. This advance deposit insures coverage during the six-month period plus the two months grace period for reporting actual premiums. The state insurance fund manual, which contains a description of each classification, rates for each classification, and rules governing risks, is published annually by the bureau and is available to employers upon request.

The bureau operates on a fiscal year of July 1 to June 30 for premium purposes. In June and December of each year, the bureau sends out payroll reports to be completed by employers. Payroll reports are due on January 31 and July 31. Coverage lapses if premiums are not paid by March 1 and September 1.

Washington

The state agency that administers the workers compensation insurance program in Washington is the Department of Labor and Industries. The address for the agency is Department of Labor and Industries, Industrial Insurance Division, P.O. Box 44000, Olympia, Washington 98504-4000; telephone (360) 902-5800; Fax: (360) 902-5798.

Almost all employees must be covered by workers compensation insurance. Those exempt from the act are sole proprietors and partners; corporate officers; casual employees not connected with a trade, profession, or business; domestic servants—unless two or more are regularly employed forty or more hours a week; any person employed to do maintenance, repair, remodeling, or similar work in or about the private home of the employer, provided the work does not exceed ten consecutive work days.

Also exempt are persons performing services in return for aid or sustenance from any religious or charitable organization; an employee subject to either the Longshore and Harbor Workers Act or the Jones Act; law enforcement officers and fire fighters hired prior to October 1, 1977, since they are subject to LEOFF act, plan I; minor children under eighteen years of age on a family farm; musicians and entertainers; insurance brokers or salesmen; and several other categories.

Although coverage is not mandatory for the previously described positions, some of them may be brought under coverage voluntarily, if the employer elects to do so, subject to the approval of the department.

Self-insurance is permitted if an employer can meet certain qualifications. The employer must have been in business for three years prior to applying for self-insurance, have a written accident prevention program in place in Washington state for at least six months prior to making application, have total assets worth at least $25 million as verified by audited financial statements prepared by independent certified accountants, and demonstrate positive earnings in the current year and two out of the last three years. The overall earnings for the last three years must also be positive. Also, the employer must have a current liquidity ratio of at least 1.3 to 1, and a debt to net worth ratio of not greater than 4 to 1.

Employers that have employees who are not residents of Washington may be exempt from the workers compensation law of Washington if work is of a temporary nature and Washington has a reciprocal agreement with the home state of such employee. In these cases, employers are required to submit a certificate to the Department of Labor and Industries stating to the effect that employees will be working in Washington for a period of time and that they are covered under the workers compensation act of their home state.

Those states that have reciprocal agreements with Washington are Alaska, Arkansas, Colorado, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, and Wyoming. Employees of all other states must be covered under the workers compensation act of Washington, assuming the type of work being performed is not exempt from the law.

Two premiums are charged for coverage—the industrial insurance premium and the medical aid premium—and there is one assessment: the supplemental pension fund assessment.

The industrial insurance premium is paid entirely by the employer. This rate is assessed according to the number of workers hours and premiums that are paid quarterly. The medical aid premium is shared equally by the employer and employee. Both premiums are experience rated after three years. Also shared equally is the assessment for the pension fund.

After coverage is written by the department, the employer must complete quarterly reports of payroll. These become due thirty days following the end of the quarter that is being reported.

Wyoming

In Wyoming, workers compensation coverage is compulsory only for specifically required industries or occupations. The Workers Compensation Division administers the state fund. The address is Wyoming Workers' Safety and Compensation Division, 1510 E. Pershing Blvd, Cheyenne, WY  82002; telephone (307) 777-7441, Fax: (307) 777-6552

The program provides benefits to eligible employees who suffer a work-related injury or illness. Employers who employ workers in required (or extra-hazardous) industries or occupations as described within the state's workers compensation act must provide coverage for their employees through the state fund. This coverage for such employees is compulsory and may not be provided through a private carrier. Coverage for all other industries and occupations is optional at the choice of the employer and is not compulsory, either through the state fund or through a private carrier.

Specific industries are excluded from coverage through the state fund unless coverage is elected for all employees. The elective coverage is in effect for a minimum three year period. Coverage may be withdrawn by the employer after the three year period, if the employer is current on all contributions and payments required by the act.

Employer premiums are set through an industry based rating system with experience modification assigned after an employer has been registered in the state fund for two fiscal years.

Any nonresident employee and his nonresident employer who are temporarily engaged in work within the state of Wyoming are exempt from the provisions of Wyoming's workers compensation act. Wyoming residents employed by a nonresident employer in a required industry or occupation must be provided coverage through the Wyoming workers compensation act. Wyoming employers and employees covered under the state's workers compensation act but temporarily working out of state are still covered by the Wyoming law. Employers who hire workers in another state to perform work in the other state must provide coverage for those employees under the laws of the other state.

Nonresident employers who hire Wyoming resident employees in a required industry or occupation must complete and file an application for coverage with the Wyoming workers compensation division. A “nonresident employer” is defined as one who has not been domiciled in Wyoming for at least a one-year prior to commencing operations in the state.

Nonresident employers must file a minimum $11,000 nonresident employer's surety bond in all cases when anticipated monthly payroll is greater than $10,000. The amount of the bond may be greater than $11,000 depending upon the size of the employer's payroll. It increases by $1,000 for each $10,000 (or portion thereof) in excess of $20,000.

In order to ensure that a subcontractor is in compliance with the workers compensation requirements of Wyoming, contractors are to obtain a Certificate (Letter) of Good Standing from their subcontractors prior to making final payment on the contract.

When employees go into another state to work, the employer must submit a written request to the department. If the state the employee is working in has a reciprocal agreement with Wyoming, the employer will receive a copy of the letter that the department sends to that state informing them of its intention. If there is not a reciprocal agreement with that state, the employer will receive a letter telling it to contact that state.

Wyoming currently has reciprocal agreements with the following states: California, Idaho, Montana, Nevada, North Dakota, South Dakota, Ohio, Oregon, Utah, and Washington.