Information for our member associations
Legal Matters: Workers Compensation
New Court Decision on Workers Compensation Insurance Requirement for Associations
An association was called before the Virginia Workers Compensation Commission to show cause as to why it should not be fined for failure to have workers compensation coverage in place. The deputy commissioner hearing the case in December 2008, C.E. Mercer, found that the association was required to have workers compensation coverage in place for two reasons:
1) The association has executive officers who are not exempt and are thus considered employees. See § 65.2-101of the Code of Virginia, below in pertinent part, which only exempts executive officers of organizations that file under § 501(c)(3) of the Internal Revenue Code (charities) from being required to maintain this coverage.
2) Individuals who perform maintenance, repair, etc. of common areas may be deemed to be statutory employees, as defined under the Workers Compensation Act, and therefore may be eligible to make a claim under the association’s workers compensation coverage. The deputy commissioner did give the association 60 days to either produce evidence of coverage and it would not then be fined, or the association could file a legal memorandum in support of its contention that it was not required to maintain such coverage. The deputy commissioner went on to say that he did not believe there was a valid basis for exemption from the requirement to maintain coverage, but we could submit a brief if we so desired.
The association at issue decided to obtain the coverage and therefore did not file a brief or further argue the issue. An Order has been entered dismissing the case as a result, but the Order did not go into detail as to the bases for finding the association was required to have this coverage.
§65.2-101 of the Virginia Code; Definitions. As used in this title: “Employee” means: h. Except as provided in subdivision 2 of this definition, (i) every executive officer, including president, vice-president, secretary, treasurer or other officer, elected or appointed in accordance with the charter and bylaws of a corporation, municipal or otherwise and (ii) every manager of a limited liability company elected or appointed in accordance with the articles of organization or operating agreement of the limited liability company.
“Executive officer” means (i) the president, vice-president, secretary, treasurer or other officer, elected or appointed in accordance with the charter and bylaws of a corporation and (ii) the managers elected or appointed in accordance with the articles of organization or operating agreement of a limited liability company. However, such term does not include non-compensated officers of corporations exempt from taxation pursuant to § 501 (c) (3) of Title 26 of the United States Code (Internal Revenue Code of 1954).
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