Virginia Statutory Employer: When a Sub’s Injury Becomes Your Claim
Quick Takeaways
- The Liability: In Virginia, you are liable for a subcontractor’s employees if they don’t have their own insurance — regardless of what your contract says.
- The Rule: Under Virginia Code § 65.2-302, liability flows “up the ladder” from the sub to the General Contractor.
- The Risk: One uninsured subcontractor can double your payroll at audit and add $100,000 in claims to your record.
- The Move: Never let a sub on the job site without a verified COI. A “Business License” is not insurance.
In Virginia, the law is designed to ensure workers receive benefits. If the direct employer lacks insurance, liability moves up the chain until it finds a covered party. Under Virginia Code § 65.2-302, that obligation flows upward — and it can land on the General Contractor.
The Chain of Liability
Under Virginia Code § 65.2-302, liability flows uphill:
- Owner (A): Hires a General Contractor (B).
- Contractor (B): Hires a Subcontractor (C).
- Subcontractor (C): Hires an employee (D).
If Worker D gets hurt and Subcontractor C doesn’t have workers’ comp insurance, Contractor B is legally responsible for the claim as the “Statutory Employer.” If Contractor B also lacks coverage, liability moves to the Owner. In Virginia, the project’s top-tier financier is the ultimate backstop for every worker on the site.
The COI Is Just Paper
Many General Contractors believe a signed contract stating, “Subcontractor agrees to provide insurance,” offers protection.
That contract is worthless at the Virginia Workers’ Compensation Commission. The Commission isn’t concerned with private contract disputes. If the sub’s policy was cancelled for non-payment the day before the accident, you are the employer.
Consider also the audit exposure: if your “Independent Contractor” secretly hired three helpers, Virginia law requires you to include those employees in your payroll count. A $50,000 audit bill for workers you didn’t know existed is a real and avoidable outcome.
The Business License Myth
Small subs sometimes claim: “I have a business license, so I’m a legal company. I don’t need workers’ comp.”
That claim is incorrect. Local localities in Virginia require a Form 61A (Contractor’s Certification) to obtain a business license. This form requires the sub to certify they have insurance. If they misrepresented their coverage, they may lose their license — but you still pay the workers’ comp claim.
Frequently Asked Questions
Can I sue the sub to get my money back?
Yes. Virginia law gives you an automatic subrogation right against the uninsured sub. That right allows you to pursue recoupment — but if they didn’t have money for insurance, they likely lack the resources to satisfy a judgment.
Does this apply to “Sole Proprietors”?
Generally, no. If the sub is a one-person shop with no employees, they are excluded. But the second they bring a helper on site for even one afternoon, they become an employer — and you become the Statutory Employer for that worker.
How do I protect my company?
Direct Verification is the only reliable defense. Call the insurance carrier listed on the sub’s COI and confirm the policy is active. Keep a log of every sub’s coverage dates with expiration tracking. Do not rely on a COI alone — verify it directly with the carrier.
Audit Your Subcontractor COI Files Quarterly
Review your active subcontractor list every quarter and verify that no policies have lapsed. Any sub whose coverage expiration has passed is a statutory liability gap. Address it before the work begins — not after an injury occurs.
Agents who help Virginia general contractors manage statutory employer exposure and COI verification programs can find resources at WorkCompProfessionals.com. Employers who want to understand their subcontractor workers’ comp liability can start at ConquerCompCosts.com.