Is every Virginia employer an "employer" covered by the Virginia Workers' Compensation Act (the "Act")?
In our earlier blogs we have discussed the Act from the perspective of an injured worker proving her claim. However, knowing whether the Act applies to their relationship is important for both the worker and the "employer". If the relationship is not covered by the Act, then the injured worker is not prevented from suing the "employer" if the "employer's" negligence caused her injury, and the "employer" can defend the worker's claim based upon the worker's contributing negligence. But negligence is not an issue for either the worker or employer in claims covered by the Act.
When are you an "employer" for purposes of claims made by an injured worker under the Act? Any business paying three or more full or part-time persons regularly employed in the business is an employer within the meaning of the Act. Whether the owner counts as a person regularly employed can be important for small businesses trying to avoid paying a workers compensation insurance premium, and the answer depends on the type of ownership is involved in the employer. Generally, the sole proprietor of a business is not counted as an employee, but compensated executive officers of a corporation or managers of a limited liability company are counted.
Potential employers often try to escape responsibility for carrying workers compensation insurance by claiming workers are "independent contractors", not employees. No payroll taxes are withheld and often the worker signs a document describing herself as an independent contractor. However, control determines the nature of the relationship. A potential employer who controls how the worker's duties are performed, assigns the work to be performed, requires attendance at the work at specific times, arranges for the work that is assigned, provides tools, equipment, or vehicles used by the worker, and approves the work completed by the worker is generally found to be an employer. This is especially so for the worker who does not provide her skills and labor to other parties while performing for the potential employer.
Answers to the questions about an employer's status are fact specific. No two cases are factually the same. Establishing the nature of the relationship between the worker and employer is crucial to determining the rights and liabilities of each. Professional guidance and advice is important to each party.