West Virginia Workers' Compensation: Who Must Carry It, Private Carriers and the Uninsured Fund
West Virginia Workers' Compensation: Who Must Carry It, Private Carriers and the Uninsured Fund
If you hire anyone in West Virginia, workers' compensation will be one of your first insurance decisions, and it is one of the easiest to get wrong. The rules come from state statute, the system has changed significantly since 2006, and an employer without coverage faces consequences well beyond a fine. What follows covers the rules for West Virginia workers compensation: who must carry it, who can opt out, how the private market works and what happens when an employer is uninsured.
This guide is informational content for business owners, not legal or tax advice. Confirm the details with the Insurance Commissioner before you hire, and talk to a qualified attorney or CPA about ownership structure, claims or any dispute.
Who Counts as an Employer
Under W. Va. Code 23-2-1, an employer is anyone who regularly employs another person to carry on any industry, service or business in the state. The test is regular employment, not the job title or the paperwork. A shop with one steady part-time clerk is an employer under that definition, and so is a contractor who keeps a helper on the payroll from one month to the next.
Registering your company with the Secretary of State does not answer this question. Filing Articles of Organization (Form LLD-1) for an LLC costs $100, and a corporation files Articles of Incorporation (Form CD-1) for the same $100. Those filings create the legal entity. They do not create a workers' compensation obligation, and they do not satisfy one. You can check your entity's status through the Secretary of State business search at http://apps.sos.wv.gov/business/corporations/. The $30 Business Registration Certificate from the State Tax Division is also not an insurance requirement. It is a tax registration.
Who Is Exempt or May Opt Out
Some employers are not required to carry coverage, and some may elect it even though the law does not compel them. The categories are:
- Domestic service, such as a household that employs a nanny, housekeeper or caregiver.
- Agricultural employers with five or fewer full-time agricultural employees.
- Casual employers: three or fewer employees, with work that is temporary, intermittent and sporadic, and that does not exceed 10 calendar days in a calendar quarter.
- Churches.
- Professional sports organizations.
- Certain volunteer rescue squads.
Read the casual employer test closely. Its conditions must all hold at once: the headcount, the nature of the work and the 10 day limit per quarter. A seasonal business can pass the 10 day limit faster than it expects, so track days worked each quarter rather than estimating at year end.
Even where coverage is optional, think before you rely on an exemption. Customers, general contractors and licensing boards may ask for proof of coverage whether or not the law requires it. If an uninsured worker is injured, the consequences described below apply to your business. For many small employers, electing coverage is the simpler path.
Owners, Partners, Officers and LLC Members
Sole proprietors, partners and corporate officers may elect to exclude themselves from coverage. An LLC may exclude up to four managers, officers or members. Three points follow from that rule. The exclusion is a choice you make, not a default. It applies to the owners' own status, not to the employees you hire. And the four person limit is a ceiling, so an LLC with more managers or members than that needs a deliberate decision about who is excluded.
Ask the Insurance Commissioner how an election or exclusion is made and documented, and keep your own written record of who elected out and on what date.
How the Market Got Here: From State Fund to Private Carriers
West Virginia's system changed in two steps. The state-run fund was replaced by an employers' mutual insurance company, which began operating on January 1, 2006. The market then opened to competing private carriers on July 1, 2008. The Insurance Commissioner regulates the carriers in both segments, and the governing statutes are W. Va. Code 23-2C and 23-2B.
| Date | What changed |
|---|---|
| Before January 1, 2006 | Coverage came through the state-run fund |
| January 1, 2006 | The employers' mutual insurance company began operating |
| July 1, 2008 | The market opened to competing private carriers |
For a new employer, the practical choice is between the employers' mutual and a licensed private carrier. Premiums, underwriting, claims handling and service can differ between them, so get written quotes from more than one source rather than renewing whatever you were offered first.
Buying Private Coverage: What to Verify
- Confirm that the carrier is authorized to write workers' compensation in West Virginia by checking with the Insurance Commissioner before you sign.
- Ask for a written certificate showing the policy number, the effective date and the coverage terms. Keep copies with your hiring file and your contracts.
- Make sure coverage starts the day your first employee begins work. A policy bought after the first hire leaves a gap, and that gap is exactly where the default rules apply.
- Ask how premiums are calculated and audited. Payroll classification drives the price, so confirm your job classes in writing and read the audit terms.
- Check the policy paperwork for any owner or officer exclusion, and confirm it matches the election you intended.
What Happens If You Are Uninsured
An employer that fails to maintain coverage is in default. The Insurance Commissioner posts a notice of that default, and the employer is liable to its injured employees for damages. Under W. Va. Code 23-2-5 and 23-2-8, an uninsured employer cannot rely on the three defenses that normally limit injury lawsuits:
- The fellow-servant defense, which argues that a co-worker, not the employer, caused the injury.
- The assumption-of-risk defense, which argues that the worker knew about and accepted the danger.
- The contributory-negligence defense, which argues that the worker's own carelessness contributed to the harm.
Losing those defenses changes the math on any injury claim. A small business that would ordinarily contest a claim on those grounds must face it on the facts, and the resulting judgment can be far larger than the premium it saved. Going without coverage is not a cost-cutting measure. It moves the risk onto the company's balance sheet.
The Uninsured Fund: What Is Verified and What to Confirm
Readers looking for the uninsured fund usually want to know two things: whether a fund pays an injured worker when an employer has no coverage, and whether the fund later pursues the business. The rules in the previous section are the part this guide can state with confidence. The employer is in default, a notice is posted, and the employer is liable without the three defenses. How any fund pays claims, what it recovers from the employer, and what charges may apply are questions for the Insurance Commissioner. Get that answer in writing before you assume a fund protects either you or your workers. A fund is not a substitute for buying coverage.
Where Licensing Boards Check for Coverage
West Virginia has no general statewide business license, so proof of coverage often comes up when you apply for a trade or industry license rather than on a single state form. The Alcohol Beverage Control Administration (ABCA) checks for coverage, and several other boards do as well. Confirm with each board which ones require proof:
- Contractor Licensing Board: residential work above $5,000 or commercial work above $25,000.
- State Fire Marshal: electricians.
- Division of Labor: plumbers and HVAC technicians.
- ABCA: alcohol licenses.
- West Virginia Department of Agriculture (WVDA): cottage food, hemp, kratom and pesticide permits.
Coverage is state law, so the same rules apply in Charleston, Huntington, Morgantown and each of the other 230 incorporated places in the state. City requirements, including the city business license, the city gross-receipts business and occupation tax and the weekly per-worker city service fee, are separate from workers' compensation and do not change who must carry it.
A Practical Checklist Before Your First Hire
- Decide whether you are an employer under the regular-employment test. If you think an exemption applies, count headcount and days worked each quarter.
- If you are exempt or excluded, put that decision in writing and confirm it with the Insurance Commissioner. If you are not, request quotes early.
- Decide which owners, partners or officers will elect out, or which of up to four LLC managers, officers or members will be excluded.
- Get written quotes from the employers' mutual and from private carriers, and verify each carrier with the Insurance Commissioner.
- Bind coverage effective the day your first employee starts work.
- Keep certificates on file for licensing boards, customers and general contractors.
- Treat any lapse in coverage as an emergency and fix it the same day.
If you regularly employ someone in West Virginia, plan on carrying coverage unless one of the listed exemptions clearly fits. The cost of being uninsured falls on the business, and it is far larger than the cost of setting coverage up before the first paycheck.
Disclaimer: This guide is informational content for business owners, not legal or tax advice. Workers' compensation rules, exemptions and fund procedures can depend on facts specific to your business. Confirm current requirements with the West Virginia Insurance Commissioner, and consult a qualified attorney or CPA before making decisions about coverage, ownership or claims.