Virginia
Workers' Comp Exemption

Virginia’s three-person trigger includes more people than a payroll roster may show

The Virginia Workers’ Compensation Commission states the rule as 'more than two' regularly employed part-time or full-time employees. That means three is the practical coverage trigger. The employee definition is broad enough to include part-time, seasonal, temporary, family, and other workers that a small business might otherwise overlook.

Corporate officers and elected or appointed LLC managers count as employees even when they do not perform ordinary daily labor or receive a regular salary. That can move a closely held company toward the three-person line before it hires three outside workers. The owner titles on the entity record therefore belong in the head-count file.

Contractors have an additional layer because qualifying subcontractor employees can be counted with the contractor’s own employees. The Commission tells contractors to add those workforces together when the subcontractor performs the same trade, business, or occupation or fulfills the contractor’s contract.

Virginia does not issue a no-coverage waiver to a sole proprietor—and partners have an elective inclusion rule

A sole proprietor with no employees and no subcontractors is not required to carry workers’ compensation solely for the proprietor. The Commission is explicit that Virginia does not provide an exemption or waiver form for a sole proprietor or other business that is simply outside the Act’s mandatory coverage requirement. A request from a customer for a 'Virginia exemption certificate' therefore may be asking for a document the Commission does not issue.

Virginia’s statutory employee definition separately allows a sole proprietor, a sole shareholder, a sole member of a single-member LLC, or all partners of a business to elect to be included as employees if the insurer is notified. For partners, that elective-in language is the important starting point: partnership ownership alone is not the same thing as the executive-officer rule.

Do not use the absence of a waiver form as proof that the business has no workers. Preserve the entity record, staffing facts, subcontractor facts, and any voluntary-coverage election. Those records explain why the owner is outside personal mandatory coverage while still allowing the business to prove whether it has crossed the employer threshold.

LLC member and LLC manager are not interchangeable titles in Virginia

Virginia treats an elected or appointed LLC manager as an executive officer and therefore as an employee. An ordinary LLC member is different. The Commission says members are generally not viewed as employees solely because they are members, although a member who separately performs work and receives pay as an employee can have a second employee role.

A single-member LLC receives a specific statutory rule: the sole member is covered only if the member elects coverage. With multiple members, the Commission says the statute is less explicit and the facts of actual paid work matter. That is a strong reason not to copy the manager rule onto every person labeled 'member' in the operating agreement.

For a manager-managed LLC, preserve the articles or operating agreement showing who was actually elected or appointed as manager. The Commission requires this evidence for Form 16A and warns that a State Corporation Commission title filing by itself may not prove the election or appointment required for the workers’ compensation rejection.

Form 16A is a rejection by an executive officer or LLC manager—not a business exemption

Form 16A may be filed by a qualifying corporate executive officer or an elected/appointed LLC manager. The Commission’s definition covers president, vice-president, secretary, treasurer, another properly elected or appointed corporate officer, and the properly elected or appointed LLC manager. It specifically excludes titles such as director, ordinary LLC member, and chairman when those titles do not meet the executive-officer definition.

The rejection is narrower than many owners expect. An officer may reject coverage for injury or death by accident but not occupational disease. The employer must have a valid workers’ compensation policy, the form must be delivered to the employer and filed with the Commission, and the Commission reviews it before notifying the officer, employer, and insurer of approval.

Once valid, the rejection is deemed continuous unless Form 17A revokes it. The effective date is the later of policy inception or delivery of the notice to the employer under the statutory rule described by the Commission. Keep the approval with the current policy and role documentation instead of treating Form 16A as a standalone 'no insurance required' certificate.

Subcontractor head count can require a policy even when every subcontractor already has one

Virginia’s contractor rule is one of the state’s most important traps. The Commission says a contractor must count employees of subcontractors that perform the contractor’s trade, business, or occupation or fulfill its contract. It gives a simple example: one contractor employee plus one employee at each of two subcontractors produces three statutory employees and requires coverage.

The counting rule applies even if the subcontractors have their own policies. Separate proof of each subcontractor’s coverage is still valuable because a contractor can face premium or statutory-employer exposure when subcontractor coverage is absent, but proof does not erase the head-count obligation to maintain the contractor’s own required policy.

A sole proprietor who normally operates below the threshold can therefore change status by taking a job through subcontractors. Before starting a new project, count the whole statutory workforce, preserve certificates from subcontractors, and re-evaluate whether Virginia coverage is required for the contracting business itself.

Temporary work in Virginia is a separate reset because Virginia does not rely on another state’s exemption

The Commission says Virginia requires proper Virginia coverage for work performed in the Commonwealth, even temporary work, and says Virginia does not have workers’ compensation reciprocity with other states. An out-of-state company that assumes its home-state owner exemption or policy automatically travels can therefore have a coverage gap.

For many out-of-state employers, the Commission says proper Virginia coverage can be arranged by adding Virginia in the appropriate policy position, rather than relying on an 'all states' listing that does not satisfy the Commission’s requirements. The owner-rejection question remains separate: a qualifying executive officer or LLC manager uses Virginia’s Form 16A process if that person intends to reject Virginia accident coverage.

Use three change triggers for the Virginia file: a third statutory employee, a subcontracted project, and work crossing into Virginia. Add entity-role changes as a fourth trigger when a member becomes manager or an officer title changes. Each event affects a different part of the analysis and deserves a fresh source check.

What failing to secure coverage actually costs in Virginia

Virginia's civil penalty is capped, but it accrues every single day the business goes without coverage, and a knowing failure adds a separate criminal charge on top.

Under § 65.2-805, an employer that fails to insure when required faces a civil penalty of up to $250 for each day it remains uninsured, capped at $50,000 plus costs. The employer also remains directly liable to any injured employee for compensation.

Continued noncompliance can bring an order prohibiting the business from operating at all. An employer who knowingly and intentionally fails to comply can be charged with a Class 2 misdemeanor, punishable by a $1,000 fine, up to 6 months in jail, or both.

• Civil penalty: up to $250/day uninsured, capped at $50,000 plus costs
• Continued noncompliance can bring an order prohibiting the business from operating
• Knowing/intentional failure: Class 2 misdemeanor, up to $1,000 fine and/or 6 months