How Multi-State Workers’ Comp Coverage Works in the Oil and Gas Industry

Workers’ compensation insurance is one of the most important coverages for companies in the oil and gas industry. With employees operating in high-risk environments—whether on drilling sites, refineries, pipelines, or transportation jobs—the need for adequate protection is clear. What makes things more complex is that many oil and gas companies don’t operate in just one state. Crews may work in Texas one month, North Dakota the next, and Louisiana shortly after. That level of mobility introduces new challenges when it comes to workers’ compensation compliance.

Multi-state workers’ comp coverage is designed to handle these unique situations. But understanding how it works, what pitfalls exist, and how to remain compliant across state lines can be difficult without guidance. Below, we’ll explore why workers’ comp is such a challenge for oil and gas businesses, how multi-state coverage functions, and how companies can make sure they have the right protection in place.

Why Workers’ Comp is Complicated in the Oil and Gas Industry

Oil and gas companies face a different risk landscape than many other industries. Workers are exposed to hazards such as heavy machinery, high-pressure equipment, flammable materials, and remote job sites. Because of these risks, the industry has some of the highest injury rates and strictest compliance requirements when it comes to workers’ compensation insurance.

But beyond the risks, it’s the operational setup of oil and gas companies that makes workers’ comp complicated.

Multi-state operations: Many firms run drilling or production in several states simultaneously. Crews often travel where work is available, and employees may be sent to different states depending on projects.
Subcontractors and contractors: It’s common for companies to use subcontractors, independent contractors, and temporary staffing to support operations. This creates coverage questions and compliance concerns.
Varied job classifications: From roughnecks and drill operators to truck drivers, welders, and office staff, oil and gas workers fall under a wide range of workers’ comp class codes, each carrying its own rates and requirements.
State-by-state laws: Each state has its own workers’ comp rules, requirements, and penalties. What’s compliant in Oklahoma may not meet standards in Colorado or Pennsylvania.

Without multi-state coverage, companies can quickly run into compliance issues, risk penalties, or even face lawsuits if an injured worker is left uncovered.

How Workers’ Compensation Laws Differ by State

To understand why multi-state coverage is so important, it helps to know how different state laws come into play.

Coverage requirements: Some states, like Texas, allow companies to opt out of workers’ comp (although this carries significant liability risk). Others, like North Dakota and Wyoming, require all employers to purchase coverage through a state fund.
Extraterrestrial provisions: Many states require employers to cover employees who live or temporarily work in the state, even if the employer is based elsewhere.
Reciprocity agreements: Certain states have reciprocity provisions that allow coverage to extend temporarily across state lines, but these are usually limited in duration and scope.
Penalties: Penalties for non-compliance can include fines, stop-work orders, and even criminal charges. In high-risk industries like oil and gas, regulators tend to monitor compliance closely.

For a company that sends crews across state lines regularly, trying to juggle multiple policies or guess at reciprocity coverage is risky. That’s where multi-state workers’ comp coverage comes in.

What Multi-State Workers’ Comp Coverage Is and How It Works

Multi-state workers’ compensation coverage allows an employer to maintain one policy that extends to multiple states where they operate. Instead of juggling several policies, employers can work with one insurer to ensure that workers are covered no matter where the job takes them.

Here’s how it generally works:

Primary state: Every workers’ comp policy has a primary state, usually where the company is headquartered or where it does most of its business.
Other states endorsement: Most policies allow for an “other states” endorsement, which extends coverage to employees temporarily working in states not listed as primary. This prevents gaps if workers are sent out of state on a short-term project.
Listed states: Employers can list multiple states on the policy upfront, ensuring coverage in those jurisdictions. For oil and gas companies, this is essential, as projects often span several states over the course of a year.
Exemptions: Some monopolistic states (North Dakota, Ohio, Washington, and Wyoming) don’t allow private workers’ comp policies. Employers in these states must purchase coverage directly from the state fund, even if they already have multi-state coverage elsewhere.

A properly set-up multi-state policy ensures compliance, keeps employees protected, and saves the company from costly surprises.

Why Multi-State Coverage Matters for Oil and Gas Operations

The oil and gas industry operates differently than most other sectors. Here’s why multi-state coverage is particularly important:

Constantly Moving Workforce

Crews don’t just stay in one location. A drilling crew may be in Oklahoma for a few months, then move to Colorado, then to New Mexico. Without multi-state coverage, each move could create a coverage gap.

Different Risk Environments

The risks faced by employees can vary depending on location. Offshore drilling, fracking sites, refineries, and pipeline work all carry unique hazards. Policies must be structured to reflect this variety.

Multi-State Employers

Oilfield service companies, trucking operations, and pipeline construction contractors may hire employees in multiple states. Each state’s requirements apply based on the employee’s residence and work location.

Regulatory Scrutiny

Because of the industry’s high-risk nature, regulators watch oil and gas companies closely. Being caught with gaps in coverage can result in shutdowns, lawsuits, or massive fines.

Multi-state coverage gives companies the flexibility they need to operate without disruption, no matter where their crews are sent.

Common Challenges Oil and Gas Companies Face with Workers’ Comp

Even with multi-state policies, oil and gas employers often run into challenges that can complicate things:

High premiums: Because of the high-risk classification, oil and gas workers’ comp premiums are higher than average.
Employee misclassification: Mistakes in assigning class codes (such as listing drill operators as clerical staff) can result in penalties or uncovered claims.
Prior claims history: Many oil and gas firms have had prior claims, which can make insurers hesitant to provide coverage.
Audits and deposits: Traditional insurers may require large deposits, annual audits, or long-term contracts, creating cash flow headaches.
Subcontractor coverage issues: Companies can sometimes be held liable for subcontractors without proper insurance.

These challenges make it even more important to work with a broker who understands the oil and gas industry and can connect companies with the right carriers.

Case Example: A Drilling Contractor Expanding Across States

Consider a drilling contractor headquartered in Texas with crews working in both Texas and New Mexico. Texas doesn’t require workers’ comp, but New Mexico does. Without multi-state coverage, the company could find itself non-compliant as soon as crews start drilling across the border.

By securing a multi-state workers’ comp policy with both Texas and New Mexico listed, plus an “other states” endorsement for future operations, the company avoids gaps. This ensures employees are covered wherever they’re assigned and protects the company from penalties and lawsuits.

Steps Oil and Gas Companies Should Take

For companies in this industry, there are a few critical steps to make sure workers’ comp is set up correctly:

Identify all states of operation – Include states where employees live and where projects are planned.
Work with an experienced broker – Oil and gas is a high-risk sector. Not every insurance carrier will cover it, and the ones that do require expertise to navigate.
Ensure class codes are accurate – Misclassification can lead to denied claims or higher costs down the road.
Plan for monopolistic states – If operations are expected in states with state-run funds, purchase coverage directly from those funds as required.
Review and update policies regularly – Operations change constantly in this industry. Policies need to be reviewed frequently to keep coverage current.

How NPN Brokers Helps Oil and Gas Companies Secure Workers’ Comp

At NPN Brokers, we understand the challenges oil and gas companies face when it comes to workers’ compensation insurance. Many of our clients come to us after struggling to find coverage due to their industry classification, multi-state operations, or history of prior claims.

Here’s how we help:

Multi-state coverage: We work with insurance providers across the United States, allowing us to set up policies that cover multiple states under one program.
Coverage regardless of past claims: Even if your company has prior claims or has been turned away by other insurers, we have access to carriers willing to provide coverage.
No audits, no deposits, no contracts: Traditional policies can be restrictive, requiring large upfront deposits and time-consuming audits. At NPN Brokers, we only partner with insurers that offer flexibility—meaning you can pay-as-you-go without long-term commitments.
Quick turnaround: We can provide a quote within minutes and often secure coverage in as little as 24 hours, so your operations aren’t delayed.
Industry expertise: We know the oil and gas industry and the risks you face. We make sure you’re classified correctly and covered properly, so you can focus on running your business.

If your company needs workers’ compensation insurance for oil and gas operations—whether in one state or across the country—NPN Brokers can help you secure the right coverage quickly and efficiently.

Get a Workers’ Comp Quote for Your Oil and Gas Business

Multi-state workers’ comp coverage is a necessity for oil and gas companies that operate across different jurisdictions. Without it, businesses run the risk of compliance issues, lawsuits, and costly penalties. With it, they can keep crews protected, projects moving forward, and regulators satisfied.

At NPN Brokers, we make it simple. Whether you’ve had prior claims, operate in high-risk environments, or just need the flexibility to send employees where the work is, we can get you the right workers’ comp policy.

Call us today at (561) 990-3022 or fill out our online quote request form to get a fast, hassle-free workers’ compensation quote for your oil and gas company. Coverage can be secured in as little as 24 hours.