Workers’ comp for remote employees: Complete guide for employers and employees' safety

Workers’ compensation is state-mandated employer insurance coverage that provides replacement income and medical benefits to on-site and remote employees who suffer injuries in a workplace accident or sustain a work-related illness.

As the popularity of remote work and telecommuting continues to grow, the trend is impacting companies of all sizes–especially HR departments. According to Forbes, nearly one-fifth of the US workforce works remotely. A staggering 98% of workers are interested in remote work, especially a hybrid model, where they split their time between working in-office and remotely. Businesses must ensure they comply with federal and state regulations that apply to workers, whether they’re in the office or working from home. They must take special care regarding workers’ compensation, a critical area of responsibility. Workers’ compensation is mandatory in most states, and as an employer, it falls upon you to provide this coverage. In this guide, we’ll examine employer duties, who’s covered, and when. 

What is workers’ compensation?

Workers’ compensation, or workers’ comp, is state-mandated employer insurance coverage designed to assist employees who are injured or become ill due to employment-related activities. Workers’ compensation benefits vary from state to state, but generally cover medical expenses and lost wages. Coverage may also include reimbursement for disability, retraining, and, in the case of a fatality, death benefits. Workers’ comp doesn’t just cover on-site workers. Remote workers and even some contractors are entitled to coverage. 

The specific requirements and administration of workers' compensation insurance vary by state, but employers generally must purchase coverage from a private insurance company. Some states, like North Dakota, Ohio, Washington, and Wyoming, require employers to obtain coverage from a state-operated plan. In Texas, workers’ compensation isn’t mandatory for most private employers.

Both employer and employee benefit from workers’ compensation coverage. The employee receives medical care and financial support, while the employer may be protected from legal actions arising from the employment-related injury. 

Workers’ comp vs. employer’s liability insurance

Workers’ compensation insurance differs from employer’s liability insurance, though they’re complementary. Workers’ comp covers compensable medical expenses, wage loss, and rehab costs, regardless of fault. On the other hand, employer’s liability insurance covers businesses against lawsuits that allege unsafe working conditions or negligence. 

How workers’ comp claims work

The workers’ comp claim process differs depending on state workers’ compensation laws but typically follows similar steps: 

1. The employer files the claim with supporting documentation

When an employee suffers a work-related illness or sustains an injury on the job, the employer submits a workers’ compensation claim to their insurance company and other parties as required. Workers’ compensation is no-fault, but the workers’ comp claim must result from a workplace accident or employment-related illness. For example, an employee may be hurt in a fall or suffer a repetitive strain injury or carpal tunnel syndrome. The claim includes details of the work-related injury or illness and supporting medical documentation.

2. The insurance provider reviews the claim 

The insurance provider reviews the details of the work-related injury and supporting documentation provided by the employer.  

3. If approved, the insurance provider pays the benefits

If the insurance provider approves the claim, they cover the employee’s medical costs and loss of income during their recovery. 

Do you need workers’ comp for remote employees?

In most cases, employers must provide the same workers’ compensation coverage for their remote employees as they do for on-site staff, whether the employee is working from home, a different location, or on the road as a digital nomad.

The employer’s obligations may become more complex depending on whether the remote worker is in the same state, out of state, or out of the country. 

Same state: The employer provides coverage as per the state’s regulations. 

Different state: This can add a level of complexity. In most cases, the employer provides workers’ compensation coverage mandated by the state where the employee’s work takes place. Determining factors include the employee’s regular workplace, where they live, and where they spend most of their time working. Employers may have to obtain additional coverage from the state where the remote employee works to meet that state’s regulations.

Out of country: Workers’ compensation obligations are even more complex when employing a remote workforce in other countries. Your responsibilities in these cases depend on many factors and can differ widely depending on the country. In some cases, you’ll need foreign voluntary workers’ compensation (FVWC). Getting expert advice from an insurer with global experience is highly advisable. 

How does workers’ comp work for remote employees?

Depending on the complexities related to location mentioned above, remote workers are generally entitled to the same workers’ compensation coverage as traditional employees. However, remote workers bear the burden of proof when filing claims for injuries sustained while working at home. This means the employee must prove that the injury happened during work-related activities and agreed-upon work hours. 

Although it's up to the employee to prove their case, employers can still take some precautions. For example, they can create remote work safety checklists and outline activities, work hours, and expectations in written form. They can also require remote employees to have dedicated work areas and use company-supplied furniture and tools.

What does workers’ comp cover for remote employees?

Workers’ compensation covers a variety of areas and issues for remote employees, including:

• Work-related injuries
• Illnesses related to work conditions
• Medical expenses
• Disability benefits
• Lost wages
• Rehabilitation services
• Death benefits
• Travel expenses (for medical appointments)

What doesn’t workers’ comp cover for remote employees?

In most states, the following areas and issues are not usually covered by workers’ compensation: 

• Non-work-related injuries or illnesses
• Self-inflicted injuries
• Injuries sustained due to alcohol or drug use
• Violations of company safety policy
• Exempt employees (varies by state)
• Pain and suffering
• Pre-existing ailments 
• Common ailments like colds and the flu
• Acts of God (uncontrollable events like lightning storms and earthquakes) 

Challenges of workers’ comp for remote employees

Remote workplaces present a number of challenges for employers. They’re usually not designed with the same safety features as a professional environment. While remote workers’ homes aren’t necessarily dangerous, there are hazards not found in traditional office settings. From charging cables laying across the floor to children’s toys scattered about, these and other potential risks are out of the employer’s control, making it difficult to ensure a safe working area and prevent accidents. Another important factor is that most remote employees work from home alone, meaning there are no witnesses to an accident or workplace injury, just the employee’s account. 

Workers’ comp doesn’t cover every injury in the remote workspace. There are two main criteria that must typically be met for coverage to kick in (these apply to both the office and remote locations):

• The employee was conducting work business at the time of the injury
• The employee was working during mutually agreed-upon work hours

Defining these two criteria is much more difficult outside of a traditional workspace. Many employees work in different parts of their home, like the couch or kitchen table. They may also work in fits and starts, rather than one solid shift. 

This leaves a lot of room for interpretation, and, as mentioned, the employee may be the only witness as to what happened, where, and when. 

In most states, the personal comfort doctrine adds even more ambiguity. The doctrine states that work activities are not considered interrupted by certain activities related to the worker’s personal comfort. These include: 

• Coffee and meal breaks
• Restroom breaks
• Relief breaks (for example, stretching after sitting for a long duration of time)

These activities are considered part of the workday, and workers’ compensation covers any injuries that occur during them.

While there seem to be many gray areas related to workers’ compensation in remote workplaces, the good news is that the employer doesn’t decide whether a claim is valid. That’s for your insurance company and the courts to determine. 

Workers’ comp for global employees

Employers have additional considerations when providing workers’ compensation to global employees. The first step is to contact your insurance carrier and review your current workers’ comp policy to see if coverage can be extended for both the length of time and the location the employee will be working. Not all policies cover all situations. Additional coverage may be required if the assignment is considered to be permanent. 

You may need to purchase a Foreign Voluntary Workers' Compensation (FVWC) policy (also known as employers' responsibility coverage). These policies provide short and long-term coverage for employees traveling and working outside the US. 

Employees’ FVWC typically covers:

• US citizens working outside of the United States
• Local nationals working in their home country 
• Non-US citizens working in a different country (for example, an Italian national working in Bulgaria)
• Global independent contractors 

FVWC policies are available from insurance brokers and major insurance companies. Check to see if yours offers FVWC coverage as an addition to your current worker’ compensation policy or as a stand-alone option. It may also be offered as part of a package including extra insurance coverage (for example, kidnapping and ransom coverage) for global employees. FVWC policies are generally tailored to your needs and specific locations, ensuring compliance with local regulations.

Remote workplace policy

While a remote workplace policy is not mandatory for US companies, it is highly recommended and considered best practice. A remote workplace policy is a formal document that clearly explains the principles, expectations, rules, and procedures for the employer and the remote worker. The remote workplace policy clearly outlines the guidelines for remote work, ensuring fairness and transparency. It also helps protect the employer and the employee from legal liabilities related to remote work by clearly defining workplace policy. 

A comprehensive policy covers many areas, including:

• Job roles
• Job duties
• Safety standards
• Advice on preventing work-related injuries
• Guidance on setting up an ergonomic home office
• Codes of conduct
• Time and attendance policies
• Data protection policies when working from home
• Work performance criteria 
• Legal rights, including compensable circumstances
• Guidance on filing workers’ compensation claims

4 best practices for offering workers’ comp to remote employees

For many companies, employing remote workers has become commonplace, leading to a reassessment of workers’ compensation policies outside of the office. As an employer, there are steps you can take to not only protect the safety of your employees working from home, but to help ensure they have access to workers’ compensation should they need it. Businesses of all sizes must keep their employees safe and comply with workers’ compensation laws in the office or remote locations. Here are some best practices for offering workers' compensation to remote employees:

1. Create and provide a safety checklist 

A safety checklist can help create a safe work environment for remote employees. Your checklist should cover general hazards and safety issues that might crop up in a remote work setting like a home office. Employees should receive the checklist before they start working from home, so that they’re aware of potential hazards and how to avoid or mitigate them. 

Explain to your workforce the purpose of the checklist, emphasizing that it's designed to ensure a work environment that is both comfortable and safe. Provide guidance on how to set up a safe and efficient home office, emphasizing the importance of ergonomics in reducing repetitive strain and other work-related injuries. Discuss company policies related to remote work, job duties, codes of conduct, and data protection.

The contents of your safety checklist will depend on your business and the type of work the remote employee is doing. You can get an idea of what to include from this sample checklist from the California Workers’ Compensation Insurance Fund.

2. Purchase workers’ comp insurance

How and where to purchase workers’ compensation insurance will vary depending on your state's regulations and your specific business circumstances. You may buy from a private insurance carrier or a state fund, depending on the state. Some state funds are optional and are provided for high-risk industries, while other states require you to obtain coverage from the state fund. 

Once you determine the requirements in your state and locations where you have remote workers, gather the required information about your business and employees. Then, obtain quotes from workers’ compensation insurance providers according to your state’s regulations. Compare each quote's coverage and cost and select the policy that best fits your needs. 

3. Report any incident and file a claim

If an employee gets sick or suffers a work-related injury, take action immediately. You must:

• Ensure the employee seeks medical treatment immediately, providing time off if required

• Document the incident with all relevant details, including the nature of the illness or injury, how it happened, where it happened, and when. Complete your company’s health and safety incident form. Take photographs if necessary. Locate any witnesses and get their contact information. 
• Report the incident to HR and the insurance provider within 24 hours
• File a claim with all the necessary documentation
• Keep the employee informed of the claim’s status and any additional steps they may need to take
• Keep in touch with the employee while they’re recovering

4. Consolidate and track data on workers' comp costs

To track workers’ compensation costs effectively, consider a centralized data management system that integrates payroll, workers’ compensation claims, and other company data. This makes it much easier to keep track of costs, identify trends, and assess safety initiatives.

Easily manage workers’ comp for your remote employees with Rippling

Rippling PEO offers a co-employment relationship that takes payroll, benefits, workers’ compensation insurance, and EPL insurance and claims administration off your plate. Rippling provides access to a selection of quality employee benefit plans and supports employees through enrolment with a unified platform.

With Rippling PEO, managing benefits compliance is simple. In case of on-the-job injuries, Rippling’s workers' comp policy helps safeguards employers and the Rippling PEO team helps with claims administration, ensuring a smooth process.

A PEO like Rippling makes it easy for businesses to provide premium HR services and access benefits that are affordable and locally compliant. Hire and onboard employees around the world with the support of in-house HR experts, and guarantee compliance with tax filings, labor laws, and more.

Working with a PEO like Rippling can help keep your company—and workforce—more secure and in compliance with local laws and regulations, no matter where your workers are located.

FAQs on workers’ comp when working from home

What is a remote work agreement?

A remote work agreement is a contract between an employee and their employer. It covers the expectations, duties, and rights of both parties. A typical remote work agreement covers many areas, including:

• Employee’s role and job description 
• Work hours and expected availability
• Work location (i.e. working from home) 
• Compensation
• Benefits
• Equipment use and data security
• Performance expectations
• Workplace safety, including office set-up and ergonomic guidelines
• Workers’ compensation benefits
• Company policies and legal requirements

Remote work agreements should be specific to your situation and comply with employment laws in both the employee and employer’s locations. Remote work agreements are usually part of a company’s broader remote work policy.

How to reduce the risk of injuries for remote workers? 

Knowledge goes a long way in reducing the risk of injuries for remote employees. Employers should provide employees working from home with safety information and guidelines on creating a safe work environment. This can include conducting an ergonomic assessment of the employee’s remote office, supplying specialized office equipment, offering advice on preventing repetitive strain injuries and improving posture, and providing health and wellness resources like a gym membership. 

What is the “coming and going” rule of workers’ comp?

The “coming and going” rule generally states that injuries an employee sustains while commuting to and from work are not covered or compensable under most workers’ compensation policies. Commuting is considered to be a personal activity, not work-related. The rule generally doesn’t apply to those working from home, as the home office can be viewed as a secondary job site. Exceptions may apply if the employee performs work-related tasks during travel or travels to the head office on work-related business. It is important to note that the application of the “coming and going” rule can differ by state and circumstances. 

How does workers' comp work for freelancers or independent contractors working remotely?

In order to determine whether your remote workers are entitled to workers’ compensation benefits, you must classify them correctly. In general, if the remote worker is considered an employee, they are entitled to workers’ compensation. Freelancers and contractors, in most cases, are not considered employees and, therefore, are not entitled to coverage. 

But there are exceptions. Some states require that you provide workers’ comp for contract workers in specific industries. Employee classification rules can vary between states as well. The rules are even more complex for global remote workers. To stay legally compliant, check with your provider regarding your situation.

In most cases, freelancers and contractors can buy their own workers’ compensation coverage. 

Do employers have a legal responsibility for employees who work remotely?

Yes. Employers have the same legal responsibility for remote workers as they do for employees who work in an office. Remote workers and those working from home are protected by the same federal and state laws covering wages, work hours, health and safety, taxes, and workers’ compensation. 

Does OSHA cover remote employees?

OSHA (Occupational Safety and Health Administration) is the federal agency responsible for ensuring safe and healthy working conditions. Its jurisdiction is limited regarding remote workers, especially those working at home. However, employers are still responsible for ensuring remote employees have a work environment that complies with health and safety standards. Employers can assist employees by providing ergonomic equipment, health and safety guidance, and other resources.

This blog is based on information available to Rippling as of August 29, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.