For employers in the Commonwealth of Virginia, it is more important than ever to make sure your workers comp coverage is in place.
The 2014 General Assembly approved an increase in the civil penalty imposed (beginning July1) when an employer required insuring under the Workers Compensation Act fails to insure.
An employer is required by state law to insure in Virginia 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.
Be Up to Speed on Independent Contractors
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 comp, regardless of payment on a 1099 designation.
The Virginia Workers Compensation Commission encourages employers to check their coverage, avoid coverage gaps, urges uninsured employers and new businesses to familiarize themselves with workers comp insurance coverage requirements, obtain coverage when required, be compliant and avoid a penalty. Workers’ compensation is mandatory coverage. It is required by state law, and no other form of insurance may substitute. Failure to have coverage due to lack of knowledge is not a valid excuse for failure to insure.
The law change amends section 65.2-805 of the Workers Compensation Act which addresses the civil penalty for employer failure to insure.
Such employer shall be assessed a civil penalty of not more than $250 per day for each day of noncompliance, subject to a maximum penalty of $50,000, plus collection costs.
The amendment was approved March 7, 2014 and will be effective on July 1.
Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com. Contact: kstack@reduceyourworkerscomp.com.
©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.
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