Workers compensation laws were created to ensure that employees who are injured on the job are provided with fixed monetary awards. This eliminates the need for litigation and creates an easier process for the employee. It also helps control the financial risks for employers since many states limit the amount an injured employee can recover from an employer.
Workers Compensation Insurance is designed to help companies pay these benefits. As a protection for employees, most states require that employers carry some form of Workers Compensation Insurance. Workers Compensation Insurance is not health insurance. Workers Compensation is designed specifically for injuries sustained on the job. In most states, if you have employees, you are required to carry Workers Compensation coverage. Even in non-mandatory states, it can be a very good idea, particularly if you have many employees, or if they are engaged in hazardous activities.
Do I need workers compensation insurance?
New Virginia Law Effective 07/01/2014
COMMONWEALTH OF VIRGINIA VIRGINIA WORKERS' COMPENSATION COMMISSION 1000 DMV DRIVE, RICHMOND VA 23220 1-877-664-2566 (804) 205-3586 Fax: 804-367-2239 www.workcomp.virginia.gov
IMPORTANT NOTICE FOR EMPLOYERS
Civil Penalty When Uninsured for Workers’ Compensation
Will Significantly Increase Effective July 1, 2014
—Uninsured employers shall be assessed a civil penalty, subject to a maximum of $250 per day of noncompliance and subject to a maximum civil penalty of $50,000.—
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. 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 the 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. "Employee" includes statutory employees (subcontractor’s employees), corporate officers, minors, undocumented workers, 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.
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’ compensation 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, 2014.
This notice provides only a summary of workers’ compensation coverage requirements and the law change and is not intended to be a substitute for or to be considered legal advice. Workers’ compensation information is available at: www.workcomp.virginia.gov. For specific coverage questions, please contact the Insurance Department of the Commission by e-mail at email@example.com or by phone at (804) 205-3586.
Employers have a legal responsibility to their employees to make the workplace safe. However, accidents happen even when every reasonable safety measure has been taken.
To protect employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents, in almost every state, businesses are required to buy workers compensation insurance. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.
Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitiation services. It also provides death benefits to surviving spouses and dependents.
Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.
Workers compensation insurance must be bought as a separate policy. Although in-home business and business owners policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.