Virginia’s workers’ compensation law is governed by the Virginia Workers’ Compensation Act. The act is intended to provide weekly wage benefits for workers injured at work who lose time from work and payment of healthcare expenses caused by the workplace injury. The obligation of the employer to pay weekly wage benefits and healthcare benefits arises if the injury arose out of and in the course of the employee’s employment. The obligation exists regardless of fault; in other words, even if the employer is blameless, if the injury arose out of and in the course of the employee’s employment, the injury is a compensable injury. This no-fault system provides the benefit for the employer of being immune from any civil lawsuit by the injured worker for damages arising from the work injury.
The term “employer” is broad under the act. It is applies to any individual, firm, association, or corporation, or the receiver or trustee of the same, or the legal representative of a deceased employer, using the service of another for pay. Employers employing less than three employees are not covered under the act until they elect to be covered under the business’s insurance policy and notify the insurer of that election.
The definition of employee under the act is quite broad and includes both full and part time employees under either a written, implied, or oral employment contract. Certain workers are not considered employees under the act, including:
Independent contractors are typically not considered employees for the purposes of the act. However, at the election of the employer, the independent contractor may be covered by the act. For independent contractors to be covered, the employer’s insurer must agree in writing to such inclusion (unless the employer is self-insured). All or part of the cost of the insurance coverage of the independent contractor may be borne by the independent contractor.
When trying to determine if a person is an independent contractor and not an employee, the Virginia Workers’ Compensation Commission considers the following factors:
the employer’s right to hire
the employer’s power to dismiss the worker
the employer’s obligation to compensate the worker
the employer’s power to control the manner in which the work is done.
Most illegal employment relationships are still subject to workers’ compensation coverage. Accordingly, minors employed in violation of child labor laws are subject to the same protections as other employees. Likewise, illegal aliens are entitled to workers’ compensation benefits to the same extent as other employees. Coverage can even extend to illegal aliens who present fraudulent documents to secure employment.
In addition to the explicit definitions of “employer” and “employee” set forth herein, the act creates another category of employers – statutory employers. Statutory employers are covered by the act even though a traditional employment relationship does not exist between the employer and the worker. For instance, under the act, when a contractor subcontracts work that is a part of its trade, business, or occupation to a subcontractor that contractor will be liable to pay to any worker employed in the work any compensation it would have been liable to pay if the worker had been immediately employed by it. Statutory employer status does not extend to entities contracting for property management services in certain situations.
It is not difficult for an injured temporary employee to prove that legally he/she is an employee of the leasing employer for purposes of workers’ compensation benefits. To mitigate such risk, employers should consider requesting a copy of the declaration sheet of any temporary employment agency to ascertain whether the temporary employee is covered by its policy. If the employer is leasing temporary employees on a regular basis, the employer may want to investigate whether the temporary agency would add the employer to its policy as an “additional insured” so as to obtain the benefit of the workers’ compensation immunity provisions by being deemed an assenting employer together with the leasing company.
An employer who fails to secure workers’ compensation coverage for its employees will be assessed a civil penalty of not less than $500 nor more than $5,000, and will be liable during continuance of such failure to any employee for compensation that otherwise would have been due under the act. Additionally, if the employee sues an employer that failed to secure workers’ compensation insurance, the employer also loses its right to assert certain defenses to the claim including the employee’s own negligence and assumption of risk. Employers that continually fail to procure the insurance may be subjected to criminal penalties and may by prohibited from operating by the commission.
There are a few basic options for an employer to fulfill its obligations to secure workers’ compensation protection for its employees:
purchasing the insurance
receiving a certificate of authorization from the Workers’ Compensation Commission allowing the employer to be an individual self-insurer
being a member in good standing of a group self-insurance association licensed by the State Corporation Commission
entering into an agreement with a professional employer organization for professional employer services, which includes voluntary market workers’ compensation insurance for co-employees of the professional employer organization.
Any injury, illness, or death arising out of and in the course of employment is compensable under the act.
For an accident to be covered under the act, it must:
For an illness to be covered under the act, it must:
There are several exceptions or qualifications to this broad category of compensable injuries.
The following is a list of some unusual situations that may give rise to a compensable injury.
An employee injured by a tree falling on his car while driving in the course of his employment would likely suffer a compensable injury.
The act covers injuries occurring outside of the Commonwealth for injuries that would be compensable if they occurred in state. The act only applies to such a situation, however, if the contract of employment was made in Virginia and the employer’s place of business is in Virginia. The act prohibits the injured employee from recovering more than once for the injury (such as under another state’s workers’ compensation laws as well as Virginia’s).
Immediately after an injury occurs, the employer must complete an Employer Accident Report (EAR) form and submit it to insurance carrier. Within 10 days of the accident or injury, the employer (or the insurance carrier) must make a report to the commission. The report must:
Benefits payable to injured workers under the act include medical, income, and death benefits. These benefits are paid to injured employees or their surviving dependents.
This section will briefly discuss the different types of benefits to which injured workers are entitled.
Employees that are temporarily unable to perform any work are entitled to 2/3 of their gross average weekly wage up to a set maximum weekly limit. Benefits are not payable unless a disability exists for seven days. If the employee is disabled for more than three weeks, the employee will be paid for the first seven days. Benefits will not be paid for more than 500 weeks unless the person is totally and permanently disabled.
If an employee returns to light duty work after the illness or injury, benefits are paid in the amount of 2/3 of the difference between the pre-injury rate and the employee’s current rate. Injured employees on light duty work must prove that they are actively looking for a light duty job, even if they expect to return to their original job.
Employees receiving temporary benefits will not receive cost of living supplements.
If an employee files a timely claim (within two years from the injury or illness), the employee will receive medical expenses for the injury or illness for as long as necessary.
To ensure that medical benefits are paid, the employee must either select and seek treatment from a doctor from the panel offered by the employer, or if no panel is offered, seek treatment from any physician. If the employee cooperates with his/her medical treatment benefits will be paid. (The bills should be sent directly to the insurance carrier.)
Upon the death of an employee, certain benefits will be paid to the employee’s family members. First, funeral expenses (not exceeding $10,000) are covered. Second, dependent children (under 18 or students under 23), surviving spouse, and certain other qualifying dependents may be entitled to wage loss benefits.
Employees that experience permanent hearing or vision loss, disfigurement, or the permanent loss of a body part are typically entitled to separate benefits. The amount and duration of these benefits depends on the extent of the loss. Employees that become permanently disabled or paralyzed may be entitled to a lifetime wage.
If requested by the injured employee, an employee may be entitled to receive an annual cost of living increase (effective October 1 after the first year) if compensation under the act and social security benefits are less than 80% of the pre-injury earnings.
Upon the agreement of the employer, the insurance carrier, and the injured employee, the employer may make a payment to the injured employee representing, in whole or in part, the present value of the future compensation payments owed. Prior to any lump sum settlement, the commission must approve it as being in the best interest of the injured employee and/or his dependents.
The Virginia Workers’ Compensation Commission administers the act. The principal mission of the commission is to resolve disputes between employers and employees over entitlement to benefits.
The dispute resolution process consists of several stages:
The Americans with Disabilities Act (ADA) prohibits an employer from inquiring about the existence, nature, or severity of an applicant’s disability, including workers’ compensation history. A prospective employer may, however, inquire about the applicant’s ability to perform specific job functions under the ADA. Upon hiring, the ADA requires the employer to make a reasonable accommodation to an employee’s known disability if the employee is otherwise unable to perform the essential functions of the job.
Virginia’s Workers’ Compensation Act prohibits an employer from discharging an employee for testifying or asserting any claim under this act. An employee may bring a claim in a Virginia Circuit Court for any such violation by his/her former employer. The Court has jurisdiction to award, for cause shown, reinstatement to the employee’s previous job, payment of back wages, reestablishment of employee benefits, and reasonable attorney’s fees.
Employers are encouraged to work closely with their agents to understand the pricing of their workers’ compensation premiums and, should claims arise, the expenses incurred and the reserves posted to claims against the employer. The workers’ compensation premium is essentially a result of the employer’s payroll dollars per classification of type of employment position multiplied by the employer’s history of claims experience. Employers are encouraged to make certain that their employees are properly classified in the rating system used for employers. A misclassification of an employee or a class of employees can cause a substantial change in the premium.
Similarly, the expenses attributed to new claims and the reserves (projected future expenses) can materially affect the employer's experience modification factor (EMF). The EMF is a number that reflects the frequency of claims for an employer and the “severity” of the claim; that is, how expensive is the claim. The EMF is the tool used by the workers’ compensation insurers to establish a track record or history for the employer. This EMF is then used with the amount of annual payroll dollars paid by the employer and the classification of the employees that assesses how risky (such as clerical positions vs. loggers) the employer’s work is to determine the annual premium.
The employer is encouraged to be proactive about the management of the claim by the insurance company to make certain that the EMF remains as low as possible to retain control over future premiums. The employer has the right to control with whom the employee initially seeks treatment for healthcare. Employers should use this right to try to maintain management of the healthcare expenses. The employer should also aggressively try to return the injured worker to work as quickly as possible to keep the wage loss low. Such steps are important for controlling costs, keeping the EMF low, and saving on premiums.