Thursday, September 18, 2014

New Virginia Fines for Failure to Carry Workers' Compensation Insurance

Hello, Dear Readers,

One of my carriers, Builders Mutual Insurance Company (, informed me that the Commonwealth of Virginia recently passed a law that significantly increases the fines that will be levied against employers who do not carry Workers' Compensation Insurance.  Here's a copy and paste from their memo to their Agents...

On July 1, 2014, Virginia HB-458 became effective and relates directly to penalties that can be assessed on employers under the workers' compensation code.

HB-458 amends Virginia Code section 65.2-805 and changes penalties which may be assessed on  non-complying employers under the workers' compensation code with respect to licensure, timely payment of claims and proof of insurance.

Formerly, these penalties ranged from $500 to $5,000.  However, under HB-458, there is now a penalty of $250 for each day of noncompliance, up to a maximum of $50,000.  Costs to collect these penalties may also be added to the total penalty.

Please note that neither the requirements for carrying workers' compensation insurance (any company with three or more employees, full-time or part-time) nor the definition of an "employee" have changed.  An "employee" is considered any person in the service of another under any contract of hire, written or implied, lawfully or unlawfully employed.  This includes anyone in direct supervision of a company, including an apprentice, trainee, family member, seasonal or temporary employee, or contractor.

Employers should be aware that 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 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.

In Virginia, the magic number is 3.  If you have 3 or more full or part-time employees, then you must carry Workers' Compensation insurance.  For corporations and LLCs, officers count as employees.  If you use subcontractors, then they count as employees too.  Talk to your Agent if you have questions.  These new fines will be brutal.


Jimmy Norton, CPCU
Brock-Norton Insurance Agency, Inc.
703.631.4500 x2003

Sent from my iPad

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