Virginia Workers Compensation Rules for Employers

The Virginia conversation I have had most often starts with an owner counting on his fingers. Two on payroll, he says, so the threshold does not reach me. Then it turns out a two-person crew from a subcontractor was on the same job, doing the same trade, and the arithmetic that matters was never the payroll list.

Virginia sets its line at three workers rather than at one, which sounds forgiving and is not. The state counts people most employers would never put on that list: part-timers, seasonal help, the owner who serves as corporate secretary, a working cousin, and every employee of every subcontractor doing your kind of work.

This page covers one jurisdiction and one topic. The mechanics of the system itself, the trade of guaranteed benefits for the right to sue, sit in our guide to workers compensation insurance. Everything else about employing people in the Commonwealth is in the Virginia HR compliance guide.

Which Virginia Employers Must Carry Coverage

Any business that regularly employs more than two people in Virginia. The Commission states the rule in exactly those words on its insurance information page for employers, and adds a sentence worth repeating: for those employers required to have coverage, it is mandatory, with no waivers and no exceptions.

The statute arrives at the same number from the opposite side. Va. Code § 65.2-101 says the word employee does not include workers of a business that has regularly in service less than three employees in the same business within the Commonwealth, unless the employer and the workers elect to be bound anyway.

One industry is carved out of that carve-out. The statute says the exemption for a business with fewer than three employees does not apply to operators of underground coal mines or their employees. Everyone else counts to three first.

Location decides more than headquarters does. Virginia requires Virginia coverage for work performed in Virginia, even temporary work, and the Commission is blunt that Virginia has no reciprocity with any other state. An out-of-state policy usually needs Virginia added to Item 3A; a listing in Item 3C is not sufficient, and a policy from a carrier not licensed in Virginia cannot be endorsed at all.

How Virginia Counts to Three

Broadly, and that is the whole problem. The Commission describes the employee test for counting purposes as including part-time, seasonal and temporary workers, minors, trainees, immigrants, undocumented workers, working family members, people who work for churches, charities and nonprofits, and corporate officers and LLC managers even when they perform no regular work and draw no regular salary.

The subcontractor rule deserves its own paragraph because it converts a two-person business into a covered employer without a single hire. Under the statutory employer provision at Va. Code § 65.2-302, a contractor is liable for compensation owed to a subcontractor's workers doing the contractor's trade or fulfilling the contractor's contract.

The Commission's own arithmetic on its contractor information page is one employee of yours plus one employee of subcontractor A plus one employee of subcontractor B, which equals three, which means you need a policy. It holds even if both subcontractors are fully insured. Their coverage protects your premium at audit; it does not remove your obligation.

That premium point is worth acting on now rather than at renewal. Your carrier can charge you premium for any subcontractor you hire, including a sole proprietor with no employees, unless you produce valid proof of their coverage. What the auditor asks for and how businesses lose money on it is covered in our walkthrough of the workers compensation audit.

Who Is Left Out of the Virginia Requirement

The exclusion list lives in subdivision 2 of the definition of employee, and it is longer than most states. Va. Code § 65.2-101 names casual employees, domestic servants, most farm labor, real estate salespeople on commission, certain drivers, railroad workers, sports officials and trucking owner-operators, each on its own terms.

Two rows carry more risk than the rest. The first is the independent contractor line. Virginia decides status by common law, and the Commission lists the questions the courts ask on its employer FAQ page: was the worker selected, can the worker be dismissed, does the worker earn pay, and does the business control the manner and means of the work. Control is given the greatest weight.

Get that wrong and you were an uninsured employer the whole time, which is a different conversation than a tax reclassification. If the line is fuzzy in your business, work through employee versus contractor first, then read what a bad answer costs in worker misclassification.

The second is the officer rejection. Virginia lets an executive officer or LLC manager opt out, but only by filing Form 16A with the Commission for approval and a copy with the insurer, and only while the business holds valid coverage. Va. Code § 65.2-300 limits the rejection to injury or death by accident. Occupational disease stays covered no matter what the form says.

Where a Virginia Employer Buys the Policy

From the private market. Asked how to contact the Virginia state fund, the Commission answers that Virginia does not have one and that coverage is available through an insurance agent or carrier. It also says insurance cannot be purchased from the Commission itself, which is the second most common misunderstanding after the headcount.

Price is set by three things, and only one of them is negotiable in the short run: the classification code for the work, your payroll, and an experience modifier built from your own claim history. Rates are set by the Bureau of Insurance each year, and individual insurers may apply discounts or credits, so quotes from two carriers can differ on identical exposure.

Virginia offers one statutory discount an owner can act on directly. Va. Code § 65.2-813.2 requires every insurer to give a premium discount of up to five percent to an employer that institutes and maintains a drug-free workplace program, with each insurer setting its own criteria. There is no equivalent statutory credit for a safety program, though carriers often grant one voluntarily.

Two things are not substitutes for a policy. An occupational accident policy does not satisfy the Act if you are required to carry workers compensation. And Va. Code § 65.2-807 makes it unlawful to deduct any part of the premium from wages or to ask employees to contribute, with a fine of up to $100 per offense plus a refund of everything deducted.

FirstHR is not an insurer or a broker and does not sell coverage, so read this section as a map of the Virginia market rather than a recommendation. What we hold is the employee record the policy and the audit both depend on.

What Qualifying to Self-Insure Takes in Virginia

More financial depth than a small business has. Individual self-insurance runs through the Commission under Va. Code §§ 65.2-801 and 65.2-808, and the published requirements make the scale obvious before you reach the application fee.

The Commission's self-insurance page asks for Form SI20, audited financial statements for the most recent three years of operation, and a claims run covering open claims plus everything from the last three policy years, with a nonrefundable $200 filing fee and 90 days for review.

Then comes the security. It may be posted as a surety bond, a certificate of deposit, United States government obligations, a letter of credit or cash, with a minimum of $750,000, and the Commission notes that most security amounts are considerably higher than that minimum. Excess coverage may be required, and a subsidiary usually has to produce a parental guarantee.

Group self-insurance is the more realistic version of the idea for a smaller employer, and it sits with a different agency. A program for group self-insurance was authorized in 1979 and is managed by the Bureau of Insurance at the State Corporation Commission rather than by the Workers' Compensation Commission. Membership has to stay in good standing to satisfy Va. Code § 65.2-801.

One consequence outlives the decision. If a certificate of self-insurance is later surrendered or revoked, the security must remain in place to cover all outstanding liability from the period of self-insurance. You do not get the deposit back when you go back to a carrier.

The Poster, and What You Owe a New Hire

Virginia requires one posting and prints it for you. Every employer covered by the Act must post the Workers' Compensation Notice, Form 1, in a conspicuous place at the place of business, or on the company website if the business keeps no physical location. The Commission publishes it in English and Spanish.

Read the workplace notice before you hang it, because it commits you to things in front of your staff. It tells the employee to notify the employer in writing immediately of the circumstances and date of the accident. It tells the employer to give the injured worker, at the time of the accident, the names of at least three physicians from different practice groups.

That panel duty is statutory, not decorative. Va. Code § 65.2-603 requires the employer to furnish care from a physician the worker chooses out of a panel of at least three. If the panel is not offered within a reasonable time after you learn of the injury, the notice warns that the worker may be able to treat with a doctor of their own choosing, which is how employers lose control of a claim.

Underground coal operations carry a second posting. Va. Code § 65.2-405 requires the pneumoconiosis notice, Form VWC-1B, to be posted conspicuously in or about the mine operations in places employees usually frequent.

One employee notice is genuinely mandatory and gets missed. Under Va. Code § 65.2-804, an employer that cancels its policy or its membership in a group self-insurance association must give 30 days' written notice to the employees covered, and must immediately forward a copy of any cancellation notice it receives from the carrier.

Injury Reporting Deadlines in Virginia

Two clocks run at once and they belong to different people. The employee has 30 days to give you written notice of an accident. You or your carrier have 10 days from knowledge of that accident to get a report to the Commission.

The definition of minor is the part employers get wrong, because it is defined by exclusion rather than by severity. The Commission's reporting criteria treat an accident as minor only when it involves none of these: lost time over seven days, medical expenses over $1,000, denied compensability, disputed issues, a death, possible permanent disability or disfigurement, or a specific request from the Commission.

If any one of those is present, you are on the 10-day clock. Since medical expenses over $1,000 clear on an emergency room visit and a set of images, the honest default for a small employer is to treat every injury as a 10-day accident and let the carrier sort out the classification.

Late filing does more than draw a penalty. Where an employer received notice under Va. Code § 65.2-600 and failed to report to the Commission, and that failure prejudiced the worker's ability to file in time, the statute of limitations on the claim may be tolled until the report is finally made. The clock you were hoping would expire simply stops.

What Going Without Coverage Costs in Virginia

Up to $250 for each day you were uninsured, capped at $50,000 plus costs. That figure comes from Va. Code § 65.2-805, and the Commission repeats it in its employer FAQ. The rest of the exposure is what makes an uninsured injury a business-ending event rather than a fine.

The cease and desist power is the one small employers underestimate. It is not a fine you can pay later out of revenue; it stops the revenue. The Commission has to find noncompliance and give 15 days of written notice by certified mail first, which means the letter you ignored in the pile is the entire warning you get.

Proof of coverage is its own duty, separate from having a policy. Your carrier files evidence of coverage electronically within 30 days of policy inception, and if a policy lapses or is replaced the Commission wants the binder, declaration page or information page. It does not accept certificates of insurance as proof, because they do not carry enough information.

Retaliation sits in Va. Code § 65.2-308 and runs through the circuit courts rather than the Commission. No employer may discharge an employee solely because the employee intends to file, has filed, or is about to testify in a claim. Filing a fraudulent claim is the stated exception.

What to Do When Someone Gets Hurt, in Order

Care first, paperwork the same day, and the physician panel before either one if you can manage it. Virginia gives the employee the choice of doctor out of a panel you assemble, so the sequence below assumes you built that panel before you needed it.

Most of what goes wrong after this point is a records problem rather than a legal one: who was hired when, which state they actually work in, what they were told at onboarding, and where the signed acknowledgment went. That part is what FirstHR holds, and the policy still comes from your carrier.

Prevention is the cheaper end of all this, and the safety rules that govern it are federal in outline even in a state plan jurisdiction. Our guide to OSHA requirements for employers is the starting point.

If you operate in more than one state, none of the numbers above travel. Thresholds, exclusions and deadlines are set state by state, which is what our state-by-state requirements guide exists to compare. Wage rules split the same way, which is why Virginia has its own minimum wage page.

Frequently Asked Questions