Virginia Requirements Overview
In Virginia, any employer who is not self‑insured must obtain a workers' compensation surety bond if they have fewer than three full‑time employees or if they are classified as a non‑exempt contractor. The bond amount equals the statutory penalty for non‑compliance, currently set at $5,000 per uncovered employee, up to a maximum of $25,000.
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Purpose of the Surety Bond
The bond guarantees that the state can collect unpaid workers' compensation benefits and penalties. It protects employees by ensuring funds are available if the employer fails to secure proper insurance, and it safeguards the employer's credit by providing a financial backstop rather than a cash deposit.
How the Bond Amount Is Determined
Bond amounts are calculated based on:
- Number of employees covered
- Industry risk classification
- Employer's prior compliance history
For example, a construction contractor with two employees would need a $10,000 bond (2 × $5,000), while a retail store with five employees would hit the $25,000 cap.
Obtaining and Filing the Bond
Employers work with licensed surety providers who assess creditworthiness and issue the bond. The bond certificate is then filed with the Virginia Workers' Compensation Commission (VWCC) along with the employer's registration form. Renewal is annual, and the VWCC will notify the employer of any changes in required coverage.
Costs and Payment Options
Premiums typically range from 1% to 5% of the bond amount, depending on the employer's credit score and financial stability. Payments can be made as a single upfront fee or split into quarterly installments, with the surety company handling the VWCC filing on the employer's behalf.
Compliance Consequences
Failure to maintain the required bond can result in:
- Immediate suspension of the employer's right to operate
- Fines up to $10,000 per day
- Potential civil litigation from injured workers
These penalties underscore the bond's role as both a financial guarantee and a compliance tool.
Key Differences from Other States
Virginia's bond requirement applies only to small employers and non‑exempt contractors, whereas many states mandate bonds for all private employers regardless of size. Additionally, Virginia caps the bond at $25,000, a limit not commonly seen elsewhere.