3.3 Virginia Workers' Compensation Insurance

Who Must Carry Coverage

Under Title 65.2 of the Code of Virginia, an employer who regularly employs more than two part-time or full-time employees must carry workers' compensation — in plain terms, the threshold triggers at three employees.

Counting Employees

Virginia counts workers broadly. Part-time, seasonal, temporary, and minor employees all count toward the three-employee threshold. Crucially, if a business hires a subcontractor to perform the same trade or to fulfill the employer's contract, the subcontractor's employees are counted too — and the general contractor can be the statutory employer liable for benefits if the sub is uninsured. Genuine independent contractors are generally excluded, but the Commission looks past labels to the actual control and economic-reality test.

Exam trap: Virginia's threshold is three, not one. States like California require coverage with a single employee; do not confuse the rules.

Obtaining Coverage

Rating Through NCCI

Virginia is an NCCI (National Council on Compensation Insurance) state for ratemaking. NCCI provides classification codes, files loss costs, and calculates the experience modification factor (mod) that adjusts premium up or down based on an employer's loss history versus its peers. Premium is generally:

Payroll ÷ 100 × class rate × experience mod × other factors.

The VWC administers claims; NCCI handles the rating mechanics.

Covered Injuries and the "Arising Out Of" Test

Virginia compensates an injury by accident arising out of and in the course of employment and certain occupational diseases (plus a narrow set of ordinary diseases of life if proven by clear and convincing evidence). Virginia courts apply the demanding actual-risk test: the harm must trace to a specific, identifiable workplace risk, not merely occur at work. As a result, gradually developing repetitive-motion conditions are frequently not compensable as an "injury by accident" unless linked to a sudden, identifiable event.

Producers should set realistic expectations with employers about what Virginia will and will not cover.

The Virginia Workers' Compensation Commission (VWC)

The Virginia Workers' Compensation Commission is the state agency that administers the system. Its functions include adjudicating disputed claims, approving settlements, monitoring employer compliance, maintaining claim records, and overseeing self-insurers.

Claim Timeline (Memorize the Deadlines)

1. Report to employer — the injured worker should notify the employer within 30 days of the accident.
2. File the claim — the worker must file a claim with the VWC within two years of the accident date, or the claim is barred by the statute of limitations.
3. Employer/insurer response — the insurer accepts or denies and begins benefits.
4. Dispute resolution — a Deputy Commissioner hears contested claims; the full Commission hears appeals.

Benefits

The Two-Thirds Rule and Statewide Caps

Wage-loss benefits equal 66 2/3 percent of the average weekly wage, but never more than the statewide maximum or less than the statewide minimum, both reset every July 1:

Worked example: A worker earns an AWW of $900. Two-thirds is $600/week in TTD — below the $1,507.01 cap, so $600 is paid. A high earner with an AWW of $3,000 would calculate $2,000, but the cap limits the benefit to $1,507.01/week.

Penalties for Non-Compliance

Exclusive Remedy

Workers' compensation is the exclusive remedy against the employer: in exchange for guaranteed no-fault benefits, the employee gives up the right to sue the employer for negligence. Important limits:

• The worker may still sue a negligent third party (e.g., a defective-machine maker or a careless driver).
• The insurer holds subrogation/lien rights to recover benefits paid out of any third-party recovery.
• Truly intentional employer acts may fall outside the exclusive-remedy shield.