Benefits & Leave 10 min

How does workers’ compensation work for remote employees?

October 5, 2020
Preston Wickersham


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Workers’ compensation programs protect workers who are injured on the job from financial hardship. Determining the validity of a workers’ compensation claim is easy when the worker suffers an injury in the office or on the factory floor, but what happens when the workplace moves beyond a traditional office environment?

The short answer: it depends.

The full answer is more detailed. So we'll take deep dive on how workers' compensation for remote employees work (pun intended).

What is workers’ compensation, and what does it cover? 

Workers’ compensation pays for medical care and benefits to employees who get sick or injured as a result of their work. 

Employees who accept workers’ comp payments usually waive the right to sue their employer for damages or negligence. 

There are many types of work-related illnesses and injuries, many of which can also affect remote workers. These include the following:

  • Work-related transportation accidents

  • Carpal tunnel syndrome

  • Gas poisoning

  • Heatstroke

  • Arm injury or pain due to lifting office equipment

  • Chronic back problems due to prolonged sitting

  • Cumulative injuries, like occupational hearing loss 

That said, not every job injury or illness is covered by workers’ compensation. Those that aren’t covered include the following:

  • Self-inflicted injuries or injuries that result from horseplay

  • Injuries or ailments that result after a violation of company policies

  • Injuries that occur under the influence of alcohol

  • Common ailments like fever, cold, and flu

  • Incidents not triggered by work

  • Acts of God

  • Injuries that occur during an off-duty recreational activity

  • Pre-existing ailments, like diabetes complications (unless aggravated by work)

Does workers’ compensation cover remote employees?

Remote employees qualify for workers’ compensation. Any injury sustained during the course of working that would normally be covered also applies to remote employees.

This is true regardless of whether the employee works at home, as a “digital nomad,” or on assignment in a different location. When it comes to workers’ compensation claims, the nature of the injury is more important than the location at which the worker sustained it.

That said, workers cannot simply claim that any injury sustained in their typical place of work qualifies for workers’ compensation. The worker owns the burden of proof and must submit sufficient evidence to prove that the injury happened in the line of work.

Remote employees must prove their injuries happened while performing activities to further the interest of their employers, so injuries sustained while cooking dinner or mowing the lawn do not count.

What does workers’ compensation for remote employees cover?

The exact coverage requirements vary between states and, in some cases, between industries. However, most workers’ compensation for remote employees covers the following:

  • Medical costs

  • Rehabilitation expenses

  • Income replacement

  • Disability benefits

  • Compensation in case of permanent disability

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How does remote work affect workers’ comp insurance coverage?

Workers’ comp coverage is often more complex for companies with remote employees.

If you’re based in California but have remote employees in Nevada, for instance, you need to ensure that your workers’ compensation insurance covers both states. However, if your insurance company isn’t licensed in Nevada, then you may need to get another policy. Ask your insurance provider about their reciprocity clauses.

Remote employees who work outside the US for up to six months will need to be covered by Foreign Voluntary Workers’ Compensation (FVWC). Those working outside the country for more than six months may need insurance from a local carrier or an international policy.

Do you need both workers’ comp and liability insurance? What’s the difference?

Workers’ compensation provides coverage for workers who are injured in the course of performing their duties for work regardless of where that work occurs.

Liability insurance covers anyone who happens to be on company property, not just workers, and typically does not cover events that occur off the company’s physical property.

Consider a few separate scenarios. A person working from home who suffers a repetitive motion injury from too much typing could be covered under workers’ compensation. An employee traveling for work who falls down the hotel stairs and breaks her foot could also be covered by workers’ compensation. A customer who visits the company’s office and sustains an injury after slipping on a puddle would be covered by traditional liability insurance.

The two types of coverage sometimes apply to the same scenario. A worker who falls down and sustains an injury on company property may in some cases be covered by both liability insurance and workers’ compensation. Which policy pays out depends on the nature of the injury and the terms of the coverage.

Who pays for workers’ compensation for remote companies? 

The employer always pays for workers’ compensation. The employer has to take out the policy and pay the premium. They should also support any employees who need to file a claim. 

Employees aren’t required to contribute premiums for this coverage.

Is workers’ compensation required for remote employees?

In the US, workers’ comp is required for private employers with at least one employee. Texas is the only state where workers' compensation is not mandatory for private companies.

This applies to remote employees but the exact compensation coverage requirements vary by state. Check with your local Workers’ Compensation Board for exact details. However, remote companies don’t need workers' compensation for independent contractors. A contractor or freelancer is their own business entity, and they aren’t eligible for the same benefits remote and on-site employees receive. 

Keep in mind: it’s important to classify your employees correctly to ensure you’re providing the right benefits. Some companies might assume they can save money by hiring independent contractors and not paying for remote workers’ compensation. If those contractors should actually be classified as employees, it can lead to hefty fines and legal consequences.

Use Remote’s employee misclassification risk tool to check whether your contractors are classified correctly. With Remote Global HR, you can offer mandatory and competitive benefits based on local employment laws.

How does workers’ comp apply to remote employees? 

You might think if a remote employee is working from home, how can they become injured on the job? But is is possible to suffer from a work-related illness or injury, even if you never step into the workplace.

Working in a different location, however, can make workers’ comp more challenging to process. 

Companies have little control over remote employees’ safety because they can’t oversee their work environment. It’s also difficult to find a reliable witness in the case of an incident. 

So, how can you tell if your remote employee's claim qualifies for workers’ compensation?

There are two main requirements for a workers’ comp claim, whether the incident occurred in the office or remotely:

  • The incident or ailment occurred during work activities

  • The incident or ailment occurred during agreed-upon work hours

These requirements leave a lot of room for interpretation, especially for remote employees with a flexible schedule. Exact interpretations vary, but most follow the personal comfort doctrine. This means that certain non-work activities, like a coffee break or trip to the bathroom, aren’t considered a disruption and are, therefore, part of the usual workday.

Interpretations regarding what "counts” as a work-related injury vary. Let’s look at a few examples of incidents where a workers’ comp claim may be valid:

  • An employee feels a strain in their shoulder and elbow after sitting and typing for hours. The employee may have a claim because it could be argued that the injury occurred as part of their work.

  • An employee gets a package from a client at home and hurts their back while lifting it. This is compensable because the delivered package is related to their job.

  • An employee slips and falls in the bathroom during a break. This scenario would be covered by the personal comfort doctrine if the employee went to the bathroom during work hours.

Of course, not every injury that occurs during work hours may qualify for a claim. Here are some examples.

  • An employee trips on a hose while watering plants during their coffee break. While coffee breaks are part of the personal comfort doctrine and are not considered a work disruption, watering the plants isn’t work-related.

  • A remote employee is injured while surfing during their lunch break. While lunch breaks are considered part of the personal comfort doctrine, surfing isn’t a non-disruptive comfort or a part of the job and likely won’t be compensable.

Gray areas of compensable claims

Similar claims can get different rulings, depending on the circumstances. 

For instance, a claim from an employee who tripped on her dog while getting a cup of coffee in her kitchen was denied in Florida. The court argued that even though she has a work-from-home arrangement and that the incident occurred during work hours, she could’ve tripped over her dog anyway. The risk of tripping on her dog existed regardless of her work location and duties.

Meanwhile, a claim in Pennsylvania was approved for a remote employee who fell down the stairs after getting some juice. It could be argued that the risk of falling down the stairs exists whether she’s working or not, but the claim was approved for this case.

Keep in mind that as an HR professional, you’re not responsible for deciding which claims are compensable. It’s up to your insurance company and the courts.

The burden of proof: the challenges of workers’ comp for remote employees   

Different state interpretations and scenarios affect claims for workers’ comp when it comes to remote employees.

You can mandate safety precautions in your office to minimize the number of accidents and workers’ compensation claims, but for remote companies, things are different. You can’t see what employees are up to, and you can’t control where they work.

Lack of control over a remote work environment isn’t enough grounds to deny a claim. However, the burden of proof lies on the employee filing the claim. It’s up to the employee to prove that the injury or ailment happened because of their job during work hours.

All workers’ compensation claims are subject to investigation by an insurance adjuster and, in some cases, the state’s employment board.

Your responsibilities as an employer are as follows:

  • To make sure your remote employees know how to quickly report work-related injuries or illnesses to you

  • To document the incident with a detailed written statement and file a claim

  • To report the incident to your state’s workers’ compensation board

Ergonomic chair in remote office

How can companies protect themselves and their remote employees?

If companies are responsible for taking care of workers who suffer injuries while working remotely, but those companies cannot control remote work environments, what should they do to protect themselves and their teams?

First, every company with remote workers needs workers’ compensation coverage with specific clauses addressing remote work. Although the employee bears the burden of proving any claimed injury occurred during the course of work, employers should not mistake that dynamic for protection against improper claims. Anything that could cause an injury in an employee’s home could be interpreted as a workplace hazard, depending on circumstances.

To protect workers, companies should help their teams identify and eliminate (or at least mitigate) risks in their remote workplaces. Something as simple as a budget for ergonomic home office equipment could protect workers from injuries that would necessitate workers’ compensation claims.

Companies should also clearly define what their workers’ duties entail. Not all home computer activity is work activity, for example. Some companies may attempt to do this by clarifying work hours, but as more employees work flexible hours, this may not be a sustainable solution. Space-related, equipment-related, and task-related definitions are easier to control than time-related ones. While workers may still successfully claim workers’ compensation for injuries that fall outside defined parameters, these definitions are still useful as guidelines.

For example, you can create a remote workplace policy to specify guidelines.

What is a remote workplace policy?

A remote workplace policy is like your average corporate employee handbook — except the guidelines included are specific to remote work.

These guidelines might include the following topics:

  • Productivity, including whether employees are allowed flexible hours or need to be able to work synchronously during certain hours

  • Prescribed job duties and time and attendance policy

  • Remote employees’ legal rights, including procedures on filing for remote workers’ compensation

  • Home office safety standards, such as appropriate lighting and suitable desks and chairs

  • Company policies or codes of conduct the employee needs to comply with even while working remotely

The last two points are particularly important because these guidelines shows your state’s workers’ compensation board that you took steps to ensure the employee’s workplace is safe.

Remote work agreement safety checklist

Here is a standard safety checklist for your remote employees:

  • Is the floor clear and free of tripping hazards?

  • Are the phone lines and electric cables secured along the wall or under the desk?

  • Are the rugs slip-free?

  • Is there a smoke detector?

  • Is the space heater or radiator far enough away from anything flammable?

  • Is the monitor and keyboard placed ergonomically?

  • Do you have a dedicated work area?

  • Are the electrical outlets in working order?

  • Is there enough lighting?

  • Do the plugs and cables in their electrical setups have any exposed or damaged wiring?

  • Does your office chair provide good lumbar support?

Align with your remote employees to confirm that they are working from a safe environment, so you can protect your business and your remote team members.

Best practices for using workers’ comp for remote companies  

Sometimes you can do everything correctly, and an employee can still get sick or injured on the job.

In this case, your priority should be the health and well-being of the employee. Here are the steps you’ll need to take if a remote employee is applicable for workers' compensation:

  1. Ask them to seek medical attention: Make sure the employee gets the medical treatment they need, and give them time off to do so.

  2. Assess the situation: Get the facts from the employee. Ask them for all the relevant details, including what happened, the cause of the injury or ailment, and where and when it happened. If it was an accident, ask if there were any witnesses.

  3. Report the incident: The employee should report the incident immediately to their manager, who, in turn, should report it an HR professional. Document the incident and report it to your insurance provider within 24 hours.

  4. File the claim: Complete a workers’ compensation claim and ask the employee to compile their evidence. They may also need to submit proof of their medical bills or rehabilitation costs. Then, submit all of this information to your insurance carrier.

  5. Explain the next steps to the employee: Inform the employee of any time and attendance policies, and whether they need to submit any documents to rest and recover. Keep them informed about the status of their claim as the situation evolves.

  6. Make sure their workspace is safe: Help the employee come up with a plan to avoid future incidents. This should include fixing or removing the cause.

  7. Stay engaged: Let sick or injured employees know that they’re a valuable member of your team. You can send them flowers or a get-well card signed by the whole team. In the case of an extended absence, see if your employee wants to work under a modified agreement with limited duties, as allowed by their physician. In this way, your employee does not have to worry about being out of work while companies can budget claim costs.

Do workers’ compensation laws vary by country?

Yes. Workers’ compensation laws, insurance regulations, and their relationships to remote work vary from one country to another. Managing compliance can quickly become overwhelming, especially for companies with employees in multiple countries.

As an organization, you can help your remote employees prevent work-at-home injuries and illnesses from happening in the first place. Establish a comprehensive remote work policy to ensure your employees have a safe work environment wherever they are.

Remote makes it easy to stay compliant with labor laws no matter where your employees live and work. We take care of payroll, benefits, taxes, and local legal compliance so you can focus on growing your business. Contact us today to learn more about our global employment solutions.

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