When you're injured on the job in Virginia, understanding who qualifies as an employer and who counts as an employee under workers' compensation law can make the difference between receiving benefits and being left without coverage. This guide explains the key aspects of employer-employee relationships that affect workers' compensation claims in Virginia.

Who Must Provide Workers' Compensation Coverage in Virginia?

Under Virginia law, employers who have three or more regular employees working in the Commonwealth must provide workers' compensation insurance. This coverage must be provided at no cost to employees.

What Does "Regular Employee" Mean?

A "regular employee" includes part-time workers, not just full-time staff. When determining if an employer falls under workers' compensation requirements, the Virginia Workers' Compensation Commission looks at two important factors:

  1. Did the employer have fewer than three employees in service in Virginia at the time of the incident?
  2. Did the employer's "established mode of performing business" regularly require three or more employees?

Even if an employer had fewer than three employees on the day of your injury, they may still be required to provide workers' compensation coverage if their normal business operations typically require three or more workers.

Exemptions: Businesses That Don't Have to Provide Coverage

Not all employers are required to provide workers' compensation insurance. The following employment categories are excluded from coverage under the Virginia Workers' Compensation Act:

  • Casual employees: Workers performing tasks that aren't usually part of the employer's normal business
  • Domestic servants: Household employees such as maids, nannies, or housekeepers
  • Farm and horticultural laborers: With some exceptions—farmers must provide coverage if they regularly employ more than three full-time employees
  • Certain government officials: Specific officers and employees of the Commonwealth elected by the General Assembly and certain officers and employees of municipal corporations and political subdivisions elected by the people
  • Sports referees
  • Taxicab drivers
  • Certain common carrier employees
  • Volunteer fire department and emergency medical services members
  • Real estate agents and brokers: If they meet specific criteria regarding compensation structure and independent contractor status
  • Owner-operators of commercial trucking vehicles: When certain conditions are met

Who Qualifies as an Employee?

The Act defines an "employee" as "every person, including aliens and minors, in the service of another under any contract of hire or apprenticeship, written or implied," except those whose employment isn't in the usual course of the employer's business.

Important Points About Employee Status

  • Contract of hire: Can be written, verbal, or implied by the working relationship
  • Alien workers: Both lawfully and unlawfully employed workers are considered employees under the Act, though there are limitations on benefits for those not eligible for lawful employment
  • Corporate status: Executive officers of corporations and managers of limited liability companies (LLCs) are automatically considered employees under the Act
  • LLC members: Only considered employees if they specifically elect coverage and notify the LLC's insurer
  • Optional coverage: Sole proprietors and partners may elect to be covered under the Act, but aren't automatically covered

Employee vs. Independent Contractor: A Critical Distinction

One of the most common disputes in workers' compensation claims involves whether an injured worker is an actual employee or an independent contractor. If you're deemed an independent contractor rather than an employee, you generally won't be eligible for workers' compensation benefits.

How Courts Determine Employee Status

Virginia courts look at several key factors to decide if someone is an employee or independent contractor:

  1. Right to hire: Who has the authority to bring the worker on board?
  2. Power to dismiss: Who can terminate the working relationship?
  3. Obligation to pay wages: Who pays the worker and how?
  4. Power to control: Who directs the details of how the work is performed?

The power to control is considered the most important factor. Courts look at whether the employer has the right to control not just what work is done, but how it's performed.

Control Test Examples

Consider these examples from actual Virginia cases:

  • In James v. Wood Products, the court found that a worker was an employee—not an independent contractor—because the supervisor directed when he took breaks, when he ate lunch, and where and how to position equipment.
  • In Hamilton Trucking v. Springer, a trucker was deemed an independent contractor because he controlled his routes, could accept or decline jobs, and had freedom regarding trip expenses and delivery methods.
  • In Purvis v. Porter Cabs, a taxicab driver killed during a robbery was considered an employee of the cab company, even though he was paid by fares rather than wages. The company controlled which fares were dispatched to him, prevented him from picking up certain passengers, and could temporarily suspend or fire him.

Independent Contractor Agreement Not Definitive

Simply having a written agreement that designates you as an "independent contractor" is not enough to determine your status. Courts will look at the actual working relationship, particularly the employer's control over your work, regardless of what any agreement states.

Statutory Employers: When Indirect Employers Are Responsible

Even without a direct employer-employee relationship, Virginia law creates "statutory employer" relationships in certain situations. This concept is important for two main reasons:

  1. Statutory employers (and their insurance carriers) may be liable for paying workers' compensation benefits when immediate employers are uninsured.
  2. If you're injured at work, whether a company is considered your statutory employer determines whether you can sue them for negligence or are limited to workers' compensation benefits.

Types of Statutory Employers

A statutory employer can be an:

  • Owner
  • Contractor
  • Subcontractor

The "Trade, Business, or Occupation" Test

The critical issue in determining statutory employer status is whether the work being performed is part of the usual trade, business, or occupation of the employer that would normally be carried out by their own employees.

For example:

  • If you work for a subcontractor and are performing work that the general contractor would normally have its own employees do, the general contractor could be your statutory employer.
  • If you're delivering building materials but not performing construction work, you might not be considered a statutory employee of the construction company.

Public vs. Private Employers

The statutory employer test differs between governmental entities and private businesses:

  • Private businesses define their own trade or occupation and have more latitude in choosing business activities.
  • Public or governmental entities have duties and obligations defined by statute. Any activity the public entity is authorized or required to do by law is considered part of its trade, business, or occupation.

Special Employment Situations

Loaned Employees

When your regular employer "loans" you to work for another company, and that company controls your work, you may become a "loaned servant" or employee of the borrowing company. Courts consider several factors to determine employment status in these situations:

  1. Who controls the employee and the work performed?
  2. Is the work part of the borrowing employer's business?
  3. Is there an agreement between the original and borrowing employers?
  4. Did the employee consent to the new arrangement?
  5. Did the original employer end its relationship with the employee?
  6. Who provides the workplace, tools, and equipment?
  7. How long has the employment continued, suggesting employee acceptance?
  8. Who has the right to fire the employee?
  9. Who pays the employee?

Professional Employer Organizations (PEOs)

PEOs provide human resources, benefits administration, and payroll services to client companies. Under Virginia law, a PEO "contractually assumes the administrative responsibilities of its client companies for, inter alia, complying with certain provisions of the Virginia Workers' Compensation Act."

Key points about PEOs:

  • PEOs must register with the Virginia Workers' Compensation Commission
  • They must provide written agreements describing the rights and obligations of both the PEO and the client company
  • When a PEO terminates an agreement with a client company, it must notify the Commission and the insurer
  • Workers' compensation coverage continues if the Commission doesn't receive termination notice

Joint Ventures and Combined Businesses

Two separate businesses may combine to employ workers as a joint venture. If together they have three or more employees, they may be covered by the Workers' Compensation Act even if neither business has three employees individually.

A joint venture arises "when two or more persons combine in a joint business enterprise for their mutual benefit, with an express or implied understanding or agreement that they are to share in the profits or losses of the enterprise, and that each is to have a voice in its control or management."

Practical Implications for Injured Workers

Understanding employer-employee relationships has real-world consequences for injured workers:

  1. Coverage determination: Whether your employer is required to have workers' compensation insurance depends on the number of employees they have and whether exemptions apply.
  2. Benefit eligibility: Your classification as an employee versus an independent contractor directly affects your ability to receive benefits.
  3. Multiple responsible parties: In situations with contractors, subcontractors, or joint employers, multiple entities may be responsible for your workers' compensation.
  4. Right to sue: If you're injured by someone who isn't your direct or statutory employer, you may be able to bring a personal injury lawsuit instead of being limited to workers' compensation benefits.

What to Do If You're Injured at Work

If you've been injured on the job in Virginia:

  1. Report your injury to your supervisor or employer immediately
  2. Seek medical treatment from an approved provider
  3. File a claim with the Virginia Workers' Compensation Commission within two years of the injury
  4. Consult an attorney if there are questions about your employment status or if your claim is denied

Employment relationships can be complex, especially in cases involving contractors, temporary agencies, or multiple employers. If your employer claims you're not covered by workers' compensation or if you're unsure about your status, consulting with an experienced workers' compensation attorney can help protect your rights.

Conclusion

The employer-employee relationship is foundational to workers' compensation claims in Virginia. Understanding who qualifies as an employer, who counts as an employee, and how statutory employment works can help ensure you receive the benefits you're entitled to if you're injured on the job.

Whether you're an employee wondering about your coverage, or an employer trying to understand your obligations, the specific details of each employment relationship matter under Virginia workers' compensation law.