Workers’ Compensation Insurance

07/18/2011

With the intention of protecting employees by enabling them to collect any workers’ compensation claim due them by their employers regardless of the financial health of the employer, Virginia law requires every employer who regularly employs three or more full-time or part-time employees to purchase and maintain workers’ compensation insurance.  In addition to maintaining proper insurance, employers subject to the Virginia Workers’ Compensation Act must file evidence of their legal compliance with this law on an annual basis, or as otherwise required.  Further, employers are prohibited by law from deducting from the wages of any of its employees any part of the cost of the insurance or otherwise requiring employees to contribute to such costs.
In complying with this insurance requirement, Virginia employers may purchase and maintain a workers’ compensation insurance policy from a company licensed to do business in Virginia.  In the alternative, an employer may apply to the Virginia Workers’ Compensation Commission for approval to operate as an independent self-insurer.  Additionally, there are other, less often utilized methods of ensuring compliance with this law that may be more cost-effective and better suited to a particular business operation.  An employer may become a member of a group self-insurance association licensed by the Virginia State Corporation Commission, or enter into an agreement with a professional employer organization (“PEO”).
Employers who refuse or neglect to obtain workers’ compensation insurance can be fined up to $5,000.00, and in fact, the Commission has been instructed by the Virginia General Assembly to impose a civil penalty on all employers that do not comply with the insurance provisions.  Also, failure to provide the required notification to the Commission, or requiring any monetary contribution from employees for the cost of insurance, can expose the employer to additional civil fines and penalties.  In addition to the civil penalties assessed, any employer who knowingly and intentionally fails to comply with the insurance requirements is guilty of a Class 2 misdemeanor; and continuing failure to obtain insurance can result in the issuance of an order requiring the offending employer to cease and desist all business transactions until such time as the proper insurance is obtained.
If you are unsure whether you are an employer covered by the Virginia Workers’ Compensation Act, or whether you have properly complied with the laws requiring insurance coverage, please contact your attorney, lest you find out the hard, and expensive, way after a workplace injury occurs.

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