Virginia Imposes Stiffer Penalties to Employers Without Workers’ Comp Coverage

Employers who fail to obtain workers’ compensation insurance in Virginia can expect stiffer civil penalties – subject to a maximum of $250 per day of noncompliance and a maximum civil penalty of up to $50,000 – beginning July 1, 2014.

The 2014 General Assembly approved an increase in the civil penalty imposed when an employer required to insure under the Workers’ Compensation Act fails to insure.

The law change amends section 65.2-805 of the Workers’ Compensation Act. The amendment was approved March 7, 2014.

An employer is required by state law to insure when they regularly employ more than two part-time (or full-time) employees. A business that hires subcontractors or other business to assist them in their trade or to fulfill a contract must count the subcontractor’s employees as well as their own employees in determining total employees for coverage requirements.

For a contractor whose work varies, the Commission looks to the “established mode” of performing work. A contractor that hires one or more subcontractors with employees to accomplish their business is required to carry workers’ compensation insurance.

Workers’ compensation coverage requirements are complex, but focus on number of employees. It is important to be aware that an “employee” is defined broadly under the Act and includes every person in the service of another under any contract of hire, written or implied, lawfully or unlawfully employed. “Employee” includes statutory employees (subcontractor’s employees), corporate officers, minors, aliens, working family members, apprentices, temporary and seasonal employees. A business that doesn’t count all of its employees may not realize it is required to carry coverage.

Employers should also be aware, designating a worker as an “independent contractor” does not necessarily mean they are not an employee. Workers’ compensation looks to whether the business exerts control over the manner and means of how the work is performed. In the event of a claim, the facts of the work circumstances will determine if the individual is covered for workers’ compensation, regardless of payment on a 1099 designation.

Source: Virginia Workers’ Compensation Commission