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Can an out-of-state worker bring a claim in her home state?

A line worker who lived in South Dakota and worked at a manufacturing plant in Wyoming sustained a work-related injury. The plant was a Delaware corporation that conducted business in several states, including Wyoming and South Dakota. Corporate headquarters was located in Illinois. A business office in South Dakota provided administrative assistance to plant management in Wyoming. The plant reported her injury to the Wyoming Workers' Safety and Compensation Division. She received Wyoming workers' compensation benefits totaling $38,000 and received a 5 percent permanent partial impairment rating.

As a South Dakota resident, the worker sought odd-lot disability benefits in South Dakota, alleging that her physical condition prevented her return to her former employment. The worker could receive a "successive award" of workers' compensation benefits if South Dakota had the power to apply its workers' compensation law. The plant moved to dismiss her claim for a lack of jurisdiction. The Department of Labor dismissed her claim. The Circuit Court affirmed the decision, finding that the plant was not subject to South Dakota workers' compensation because it did not carry workers' compensation insurance for the worker in South Dakota. The worker appealed.

Was the department correct in dismissing the worker's claim?

A. Yes. South Dakota was not the place of the employment relationship.

B. No. The worker's residence in South Dakota entitled her to South Dakota benefits.

C. Yes. The plant could escape South Dakota jurisdiction because it did not carry South Dakota workers' compensation insurance for the worker.

How the court ruled: A. The South Dakota Supreme Court held that it did not have jurisdiction over the claim. Martin v. American Colloid Co., No. 25739 (S.D. 09/14/11).

The court explained that the legislature intended to apply the workers' compensation laws to apply to at least some injuries that occurred in another state. When determining coverage for injuries occurring out of state, the location of the employment relationship must be considered. A substantial connection with the employment relationship must be shown.

Here, the worker was hired in Wyoming, worked exclusively in Wyoming, and was injured in Wyoming. There was no connection to South Dakota aside from the worker's residence, which was not sufficient to create the substantial connection necessary to conclude that South Dakota was the place of the employment relationship.

B is incorrect. The court said that the only connection between South Dakota and the employment relationship was that the worker was a South Dakota resident throughout her employment at the plant. While this strengthened the relationship between South Dakota and the employment relationship, it was not sufficient to create the substantial connection necessary to conclude that South Dakota was the place of the employment relationship.

C is incorrect. The court said that an employer cannot escape liability by choosing not to obtain insurance for its employees. By doing so, an employer forfeits the protections of workers' compensation and can be subjected to a lawsuit.

Editor's note: This feature is not intended as instructional material or to replace legal advice.

November 10, 2011

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