Virginia Significantly Raises Worker Misclassification Fines

From Sands Anderson PC – JDSupra — “Worker misclassification remains a number one target area for both state and federal review.  On July 1, 2014, the  Virginia Workers Compensation Act (the “VWCA”) significantly increased the civil penalties that the state can impose on a Virginia business owner who has failed to insure a worker who should have been insured.

The civil penalty is now up to $250 per day for each day of noncompliance, subject to a maximum penalty of $50,000, plus collection costs.”  The VWCA requires every business owner with more than two employees (a part-time worker is counted as one employee) to have coverage for such worker.

Business owners may forget to count subcontractors/independent contractors into their calculation. According to the Virginia Workers’ Compensation Commission, “If a business hires subcontractors to perform the same trade, business or occupation, or to fulfill a contract of the business, the subcontractor’s employees are included in determining the total number of employees …A business or contractor that hires subcontractors to assist in their work or fulfill a contract must count the subcontractor’s employees as well as their own when considering if they have more than two employees, if yes, the business /contractor is required to carry workers’  compensation coverage. This is true even if all subcontractors have their own coverage.”

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