3.A vs 3.C: keeping traveling crews covered
3.A vs 3.C: keeping traveling crews covered
By O. Rickey Harris, Harris Insurance
Data center work doesn’t stay in one state. A crew finishes in Alabama and heads to Mississippi, Georgia, or Texas for the next build. If your workers’ comp policy isn’t set up for where your people actually work, an injury can turn into an argument about coverage. Most of that comes down to two lines on the policy’s information page: Item 3.A and Item 3.C.
How the policy lists states
The standard workers’ comp policy has an information page that lists states in two places.
Item 3.A lists the states where the policy applies that state’s workers’ comp law. These should be the states where you have employees or know you’ll have work.
Item 3.C lists other states. Under the policy’s Other States Insurance section, coverage can apply in a 3.C state if you start work there after the policy begins. It’s designed for work that comes up unexpectedly.
The National Council on Compensation Insurance explains how this works in its Residual Market Producer’s Guide. The details can differ by policy and by market, so read your own policy too.
Why 3.C isn’t a catch-all
Many contractors assume that if 3.C says “all states except” a short list, their crews are covered anywhere. That’s risky for a few reasons.
- It’s meant for the unexpected. If you already had work in a state when the policy started, that state generally belongs in 3.A. Other States coverage may not apply to it.
- There are notice requirements. Policies commonly require you to tell the insurance company promptly when you start work in a new state. Some set a specific window, such as 30 days.
- Monopolistic states are excluded. More on that below.
- Some states have their own rules about out-of-state employers and how coverage must be written.
A signed contract for a job in Georgia is not unexpected. Put Georgia on 3.A before the crew goes.
Monopolistic states
North Dakota, Ohio, Washington, and Wyoming don’t allow private insurance companies to write workers’ comp. Coverage comes from the state fund. A private policy, including its 3.C section, won’t cover your workers’ comp obligations there.
If you have a job in one of those states, you’ll need to set up coverage with the state fund. Employer’s liability, sometimes called stop-gap coverage, is usually handled separately. Plan for it well before mobilization.
Per diem and travel pay
Traveling crews usually get per diem, and some get paid for travel time. For workers’ comp payroll:
- Whether per diem is excluded from payroll depends on the state’s rules and on your documentation.
- Pay stubs that separate per diem from wages, a written per diem policy, and travel records all help.
- Travel time pay is usually treated as wages.
At audit, the auditor will look at your records. If per diem isn’t documented, it may be counted as payroll.
Classification across states
Class codes also change by state. Most states use NCCI codes, but some have their own rating bureaus and their own codes. An electrician might be coded one way in Alabama and another way somewhere else. Your underwriter confirms the codes for each state on the policy.
A practical routine
Here’s a routine that keeps most traveling contractors out of trouble:
- At renewal, list every state where you have work or bids out. Put the likely ones on 3.A.
- When you win a job in a new state, call your agent before the crew leaves.
- For monopolistic states, arrange state fund coverage and stop-gap employer’s liability ahead of time.
- Track payroll by state in your payroll system, not on a spreadsheet after the fact.
- Document per diem separately from wages.
- Before the audit, check your payroll by state and class against what the policy shows.
Staffing firms
If you’re a staffing firm placing workers out of state, the same rules apply, with one more wrinkle. Your workers are usually classified by the work they do at the client’s site. When you add a client in a new state, you may be adding both a new state and a new class. See our page on staffing workers’ comp for electricians and craft labor.
Wrap-up jobs
On a wrapped job, the wrap’s workers’ comp may cover your workers on that site. You still need your own policy set up for that state, because of off-site work, travel, and anything outside the wrap. See wrap-up help.
How we help
We’re licensed across most of the U.S. and can place multi-state crews. We’ll go through where your people are headed and set up the policy before they leave. Learn more about multi-state workers’ comp.
O. Rickey Harris, Harris Insurance (Old National Insurance Inc.), Jasper, Alabama
