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Rejection of Workers’ Compensation Insurance in Virginia

Virginia law dictates that employers who employ three or more part or full time employees must have workers’ compensation insurance.  (Note that for this calculation, executive officers and LLC members are defined as employees and must be included.)  It is, however, possible for employers to prepare a “Rejection of Workers’ Compensation Coverage” filing.

Worker with Boxes

The Rejection of Workers’ Compensation Exceptions

Workers’ compensation for businesses with three or more employees is required by law and legally employees cannot be excluded; however, certain executive offers and LLC members are eligible to reject workers’ compensation insurance because there is a provision of the law that allows them to do so.  This is usually done to save on the cost of the premium.  The following individuals are able to reject coverage:

  • Managing Member of an LLC: If the individual is a managing member, the member must be registered with the Virginia State Corporation Commission, file a Rejection of Coverage form with the Virginia Workers’ Compensation Commission and file a copy with the insurer to be excluded from coverage.
  • Executive Officer: Officers, such as a president, vice-president, secretary, or treasurer, can also elect out of coverage and too must be registered with the Virginia State Corporation Commission, file a Rejection of Coverage form with the Virginia Workers’ Compensation Commission and file a copy with the insurer to be excluded from coverage.
  • Standard Members of an LLC: An LLC member who is not a managing member and performs work for the business and receives compensation must be covered as employee and thus must be covered by the business’s workers’ compensation policy.  However, a member who only performs member duties does not need to be included under the policy, but can be if elected to do so.

We hope this information is helpful in determining whether or not your company can elect the rejection of workers’ compensation coverage for its managing members, officers, and owners. Value Insurance Agency Inc. can help your business navigate through the options and ensure you get the insurance that is right for you at the right price.

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