Who Is Exempt from Workers’ Compensation in Virginia?

Workers’ compensation insurance is a crucial protection for both employees and employers in Virginia. However, not all workers are required to be covered under this system. Understanding who is exempt from workers’ compensation in Virginia is essential for businesses and individuals alike. This article will delve into the intricacies of Virginia’s workers’ compensation laws, exploring the various exemptions and their implications.

General Requirements for Workers’ Compensation Coverage

In Virginia, the general rule is that a business with more than two employees is required to carry workers’ compensation coverage. This includes:

• Full-time employees
• Part-time employees
• Seasonal workers
• Temporary employees
• Minors
• Trainees
• Immigrants
• Working family members.

When counting employees, businesses must also include subcontractors’ employees if they’re hired to assist in the trade, business, or to complete a contract.

Who Is Exempt from Workers’ Compensation in Virginia?

While the Virginia Workers’ Compensation Act covers most employees, there are specific categories of workers and business structures that may be exempt from mandatory coverage. Let’s explore these exemptions in detail.

Sole Proprietors

One of the most straightforward exemptions applies to sole proprietors. In Virginia, a sole proprietor who has no employees and does not hire subcontractors is not required by law to carry workers’ compensation coverage. Note that Virginia does not provide an exemption or waiver form for businesses that are not required to carry coverage under the Act.

Independent Contractors

The status of independent contractors under Virginia’s workers’ compensation laws is more complex. Merely designating a worker as an “independent contractor” or paying them on a 1099 form does not automatically exempt them from workers’ compensation requirements. The determination of whether a worker is an employee or an independent contractor depends on several factors, including:

• The level of control the employer has over the worker’s duties
• Whether the work is part of the regular business of the employer
• The worker’s distinct occupation or business
• The skill required for the particular occupation
• Who provides tools and equipment for the job
• The length of time for which the person is employed
• The method of payment (by time or by job)
• Whether the work is part of the regular business of the employer.

A new Virginia law that took effect in 2020 helps clarify the status of contracted workers in the state. Under Virginia Code section 40.1-28.7:7, a worker is presumed to be an employee unless their employer can prove that they’re an independent contractor based on IRS standards. This broadly means that a worker may seek comp benefits as an employee even if they were mislabeled as a contractor.

Corporate Officers and LLC Members

Executive officers of corporations and managers of Limited Liability Companies (LLCs) are considered employees under Virginia law. However, they have the unique option to reject coverage if they choose to do so. To reject coverage:

1. The business must have valid workers’ compensation coverage in place.
2. The officer or manager must file a Rejection of Coverage form with the Virginia Workers’ Compensation Commission for approval.
3. A copy of the approved form must also be filed with the insurer.

Note that while corporate officers and LLC managers can opt out, they cannot exempt other employees from coverage.

Domestic Workers

Virginia law provides an exemption for domestic workers employed in private homes. Households or homeowners are not required by law to obtain coverage for workers who perform tasks related to the care, comfort, and convenience of household members. This exemption applies regardless of the number of domestic employees.

However, this exemption does not extend to businesses that provide domestic services to households.

Agricultural Workers

While not entirely exempt, agricultural workers are subject to different rules under Virginia’s workers’ compensation laws. Employers in the agricultural sector are required to provide coverage if they regularly employ more than three full-time employees. However, seasonal or migrant workers are not included in this count unless their employment exceeds 30 days in a calendar year.

Real Estate Agents and Brokers

Licensed real estate agents and brokers who are paid primarily on commission are typically exempt from workers’ compensation requirements in Virginia. This exemption recognizes the unique nature of real estate work, where agents often operate with a high degree of independence.

Federal Employees and Railroad Workers

Employees of the federal government and railroad workers are exempt from Virginia’s workers’ compensation laws because they are covered under separate federal laws. These include:

• The Federal Employees’ Compensation Act (FECA) for federal workers
• The Federal Employers Liability Act (FELA) for railroad employees.

Volunteer Workers

In many cases, volunteer workers are not considered employees under Virginia’s workers’ compensation laws. However, there are exceptions, particularly for volunteer firefighters, police officers, and emergency medical technicians, who may be covered under specific provisions.

Voluntary Coverage for Exempt Individuals

Even if an individual or business is exempt from mandatory workers’ compensation coverage, they may choose to obtain voluntary coverage. This can provide important protections and may be beneficial for:

• Sole proprietors who want personal coverage
• Independent contractors seeking to protect themselves
• Small businesses looking to attract and retain employees.

When an Employer Fails to Provide Workers’ Comp Coverage

Virginia penalizes employers that fail to provide the required workers’ compensation coverage. They may face thousands of dollars in fines and potential criminal charges. If you’re a worker whose employer is not complying with workers’ comp requirements, you have a number of options:

• Seek compensation from the Virginia Workers’ Compensation Commission’s Uninsured Employers’ Fund (UEF).
• Report the violating employer to the Virginia Employer Non-Compliance Alerts (VENCA).
• Explore an injury lawsuit directly against the employer, as they are likely liable for injuries that their workers suffered on the job.

In any of these options, you’ll want to have a workers’ compensation lawyer by your side. Coverage issues can be complex and contentious, so you must be prepared to protect your rights with a skilled legal advocate.

FAQ Section

Q: Can a sole proprietor in Virginia choose to get workers’ compensation insurance even if they’re exempt?

A: Yes, a sole proprietor in Virginia can choose to obtain workers’ compensation insurance even if they are exempt from the legal requirement. This is known as voluntary coverage. While a sole proprietor with no employees is not mandated by law to carry workers’ compensation insurance, they may opt for coverage to protect themselves in case of work-related injuries or illnesses.

Voluntary coverage can be particularly beneficial for sole proprietors who:

• Work in high-risk industries where injuries are more likely to occur
• Want to ensure they have medical coverage and wage replacement if they’re unable to work due to a job-related injury
• Contract with clients who require proof of workers’ compensation coverage.

To obtain voluntary coverage, a sole proprietor would need to contact an insurance provider licensed to sell workers’ compensation insurance in Virginia. It’s important to note that once a sole proprietor elects to have coverage, they are bound by all provisions of the Virginia Workers’ Compensation Act, including the requirement to maintain coverage until it is properly terminated.

Q: How does Virginia determine if someone is an independent contractor or an employee for workers’ compensation purposes?

A: Under Virginia Code section 40.1-28.7:7, workers are presumed to be employees unless their employer can prove they’re contractors using the standards of the Internal Revenue Service (IRS). The IRS uses a multi-factor test to determine whether a worker is an independent contractor or an employee. These factors include:

• Control: The extent to which the employer directs the work, including how, when, and where it’s performed
• Integration: Whether the work is part of the regular business of the employer

• Skill level: The level of skill required for the job, with higher skill levels more indicative of independent contractor status
• Tools and equipment: Whether the worker or the employer provides the necessary tools and equipment
• Duration of relationship: Longer-term relationships are more likely to indicate employee status.
• Payment method: Payment by the job rather than by time (hourly, weekly, or similar) is more indicative of independent contractor status.
• Termination rights: The ability to terminate the relationship without liability is more indicative of an employer-employee relationship.

It’s important to note that no single factor is determinative, and the Commission looks at the totality of the circumstances. Additionally, simply labeling a worker as an independent contractor or using a 1099 form for tax purposes does not automatically make them an independent contractor under Virginia law.

Q: Are there any special considerations for workers’ compensation exemptions in the construction industry in Virginia?

A: Yes, there are special considerations for workers’ compensation exemptions in the construction industry in Virginia. The construction sector is often subject to more stringent requirements due to the higher risk of workplace injuries. Here are the key points to understand:

• General requirement: In Virginia, all construction businesses must carry workers’ compensation insurance if they have more than two employees, including part-time workers.
• Subcontractor employees: Unlike some other industries, in construction, the employees of subcontractors are always counted when determining if a contractor needs workers’ compensation insurance. This means that even if a general contractor has fewer than three direct employees, they may still need coverage if they use subcontractors whose employees, when combined with their own, total more than two.
• Sole proprietors and partners: While sole proprietors and partners in construction businesses are generally not required to cover themselves, they must provide coverage for their employees.
• Out-of-state contractors: Construction companies based outside of Virginia but performing work in the state must comply with Virginia’s workers’ compensation laws, even for temporary projects.
• Owner-operator exemption: Virginia does not have a specific “owner-operator” exemption for the construction industry, unlike some other states.
• Statutory employer doctrine: In construction, the concept of “statutory employer” is particularly relevant. This means that a general contractor can be held responsible for providing workers’ compensation benefits to the employees of uninsured subcontractors.
• Certificates of Insurance: It’s common practice in the construction industry for general contractors to require subcontractors to provide certificates of insurance proving they have workers’ compensation coverage.
• Penalties: The construction industry often faces stricter enforcement and higher penalties for non-compliance with workers’ compensation laws due to the high-risk nature of the work.
• Voluntary coverage: Even when not required, many small construction businesses opt for voluntary coverage to protect themselves and to meet client or project requirements.
• Misclassification issues: The construction industry is often scrutinized for potential misclassification of employees as independent contractors. Proper classification is crucial for compliance with workers’ compensation laws.

Confused About Your Worker’s Compensation Coverage? Consult With Attorney Jaleh Slominski Today.

For those seeking clarity on their workers’ compensation rights in Virginia, consulting with a knowledgeable attorney can provide valuable guidance. Attorney Jaleh Slominski of Slominski Law, with offices in Lynchburg and Roanoke, offers experienced legal advice on workers’ compensation matters. She has been named a “Go-To Lawyer” for Virginia workers, with more than 30 years of legal experience behind her.

For personalized assistance, contact Slominski Law at (434) 384-9400 (Lynchburg office) or (540) 554-3762 (Roanoke office) and get your free consultation.