The Defense Base Act (DBA) provides workers’ compensation insurance for U.S. federal government contractors and subcontractors working overseas. Enacted in 1941, the DBA extends the Longshore and Harbor Workers’ Compensation Act to cover civilians working on overseas U.S. military bases, U.S. government construction projects abroad, U.S.-funded public works overseas, and other qualifying work.
As an employer with staff operating internationally on U.S. government-connected contracts, it is essential to be very familiar with DBA compliance. Read on for important aspects of Defense Base Act insurance regulations to help employers secure proper coverage.
Determining Which Employees and Projects Require DBA Insurance
The DBA mandates coverage for all employees on qualifying overseas contracts, regardless of their nationality or country of hire. This includes:
- U.S. citizens and legal residents
- Local nationals and host country hires
- Third-country nationals hired from abroad
Projects that necessitate DBA coverage include:
- Work on U.S. military overseas installations
- Overseas public works contracts with any U.S. government department
- Work abroad funded under the U.S. Foreign Assistance Act
- Contracts supporting Armed Forces welfare initiatives overseas
Additionally, DBA insurance extends to employee injury or death during transport to/from the worksite if the employer provides or pays for this travel.
Securing Compliant DBA Insurance Policies
Employers must secure DBA coverage through a U.S. Department of Labor-approved insurance carrier before covered work begins. Over 100 carriers have been authorized to offer these policies.
If an employer does not get insurance from an authorized provider, the president, secretary, and treasurer may face criminal charges for non-compliance, which could result in significant fines of up to $10,000 and imprisonment for up to one year per individual.
Additionally, failing to secure policies makes employers vulnerable to lawsuits. Employees could file compensation claims or sue for tort damages without employers relying on common defenses such as shared fault or contributory negligence.
Maintaining Continuous Coverage
Employers must keep DBA insurance active throughout the contract term and as long as they have covered employees abroad. This applies equally to prime contractors and subcontractors.
If a subcontractor allows DBA coverage to lapse, the prime contractor inherits responsibility for securing benefits for the sub’s employees.
Reporting Workplace Incidents
DBA insurance policies finance medical care, lost wages, and other benefits for overseas staff injuries, illnesses, and deaths arising from their work.
Employers must notify insurers about workplace incidents as soon as possible to expedite help for affected employees. For severe injuries or deaths, reporting should occur within one day. In other cases, the notification period is 10 days.
Submitting the initial injury report prompts the carrier to open a claim to coordinate resources and track benefits delivery. Delayed reporting could stall aid for struggling employees.
Overview of Covered DBA Benefits
In addition to prompt access to medical treatment, covered employees may receive:
Wage replacement for partial or total disability- Vocational rehabilitation for permanent disability
- Death benefits for survivors
Compensation rates derive from standard workers’ compensation calculations based on the employee’s earnings.
The DBA does not impose fixed minimum or maximum payment amounts. However, aggregate claims payouts link to a national average wage index, so the total compensation eligible employees can receive will rise moderately yearly.
Appealing Denied DBA Claims
Unfortunately, disputes between covered employees and insurers over benefit entitlements crop up regularly.
If an insurer denies a worker’s request for DBA benefits, claimants can ask the Department of Labor Office to mediate. DOL representatives attempt to broker a settlement acceptable to both parties. If that fails, an administrative law judge steps in to adjudicate.
Appeal avenues exist for challenging a judge’s ruling as well. However, avoiding formal litigation tends to serve all parties best.
Averting Gaps in DBA Coverage
Given the compliance and employee protection risks of letting DBA policies lapse, active coverage management is necessary. Strategies such as setting calendar reminders for renewal deadlines help avoid coverage gaps.
Assigning ownership for tasks such as paying premiums, submitting employee claims, and fielding renewals to one primary administrator creates accountability. This prevents disjointed management across departments, which leaves employers exposed.
Integrating new international projects into DBA compliance workflows right away also helps. Acquiring insurance, reporting worker populations accurately, and establishing protocols for injury notification should also be included from inception.
As international contractors, staying current on evolving Defense Base Act rules also warrants ongoing attention to avoid good faith oversights. Periodic legal check-ins help here.
Comprehending Waivers
In limited cases, contractors can obtain waivers freeing foreign national employees from mandatory DBA coverage. However, the Department of Labor only grants waivers if local law provides comparable benefits.
Additionally, legal residents, citizens, and staff hired within the U.S. still require DBA insurance. Employers always retain the option to extend DBA benefits regardless of waivers.
It rarely makes sense to secure waivers for contractors working internationally. The redundancy in benefits for U.S.-person workers negates most of the upside. Assuring local law sufficiently substitutes for the DBA can be onerous and complicated compared to maintaining insurance.
Rely on CI Solutions for Your Defense Base Act Insurance
Companies employing U.S. contractors internationally face complex but mandatory insurance rules under the Defense Base Act. CI Solutions has the specialized expertise needed to support employers with securing compliant coverage.
Our team stays on top of evolving regulations and policy enrollment procedures across top DBA carriers. Lean on us to source the precise solutions your overseas staff require while easing the administrative workload for your HR and finance groups.
Contact us today at 703.988.3665 or online so our knowledgeable brokers can evaluate your current or upcoming international worker populations and develop a custom DBA solution to protect your company and employees.