|February 13, 2009|
Previously published on June 2008
It has been well-established that the Pennsylvania Workers' Compensation Act applies to all injuries occurring within Pennsylvania, no matter where the contract for hire has been made. See McIlvaine Trucking, Inc. v. W.C.A.B. (States), 810 A.2d 1280 (Pa. 2002). However, this issue of whether jurisdiction applies to injuries occurring outside the commonwealth is not so clear and often leads to extensive litigation. In some situations there are practical considerations for employers and insurers which may be helpful in ultimate litigation.
The "extraterritorial" provisions of the Act were first addressed in 1974 with the introduction of Act 263, §305.2, 77 P.S. §411.2. Under this amendment, there are four situations where the Act will apply to injuries occurring outside the commonwealth:
1. When the employment is principally located in Pennsylvania;
2. Where there is a contract for hire in Pennsylvania and employment is not principally located in any state;
3. Where there is a contract for hire in Pennsylvania and the injury occurred in a state whose law does not apply; or,
4. The claimant is working under a contract for hire made in Pennsylvania for employment outside the commonwealth.
The first situation which needs to be considered by insureds and insurers is where is the employment "principally localized?"
The Act defines "principally localized" as:
A person's employment is principally localized in this state or another state when (i) his employer has a place of business in this or such other state and he regularly works at or from such place of business, or (ii) having worked at or from such place of business, his duties have required him to go outside of the state, or (iii) if he is domiciled and spends a substantial part of his working time in the service of his employer in this or such other state.
Section 305.2(d)(4), 77 P.S. §411.2(d)(4).
Trucking companies and construction companies are most often involved in extraterritorial jurisdiction issues. However, these cases can apply to any employer who is involved in multi-state employment. One step which may help to reduce controversy is to have a written agreement between the employee and the employer that the business is "principally localized" in a particular state. These agreements have been given valid effect under the Act unless the other state refuses jurisdiction. Creel v. W.C.A.B. (Overland Express, Inc.), 643 A.2d 784 (Pa. Cmwlth. 1994). However, agreements that clearly try to provide exclusive jurisdiction to another state have not been found enforceable. Owens v. W.C.A.B. (G.D. Leasing of Indiana), 769 A.2d 1220 (Pa. Cmwlth. 2001).
The second situation where extraterritorial jurisdiction may apply to injuries outside of Pennsylvania arises where there is a contract for hire made in Pennsylvania and employment is not principally located in any state. The problem in these situations arises over where was the contract for hire made.
Where there is an actual pre-employment contract executed by the employee and employer, it is easy to determine where the contract for hire has been made. Today, contracts for hire can be made over the phone and, even more increasingly, over the internet. Employers may be facing future litigation in unfriendly states where the contract for hire was made either over the phone or over the internet. In order to reduce the possibility of seeing these type of cases in the future, employers should make it expressly clear to telephone and internet applicants that, although they are being considered for employment, there will be no contract for hire until the employee has a pre-employment meeting with the employer. For instance, if the employer is a trucking company with the sole place of business in Ohio who hires drivers with multi-state routes (employment is not principally localized in any state), that employer might be at a risk of facing a Pennsylvania workers' compensation claim if the employee resides in Pennsylvania and the contract for hire was made over the phone or internet. That employer can greatly reduce its risk of future litigation in Pennsylvania by expressly stating to prospective applicants they will not officially be hired until that applicant has a pre-employment meeting with the employer in Ohio.
In summary, the Pennsylvania Workers' Compensation Act may extend its extraterritorial jurisdiction to cover some injuries which occur outside the commonwealth. The most important consideration is to make sure they have workers' compensation coverage for injuries and accidents which might be covered under the extraterritorial jurisdiction law of Pennsylvania, or any other state. Every employer should review its workers' compensation coverage to be certain that they would be covered in an extraterritorial jurisdiction.