Virginia Independent Contractors laws & HR compliance analysis

Virginia Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor,” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, withholding tax, workers' compensation, and state wage and hour requirements.
The Virginia General Assembly has passed legislation to prevent misclassification and penalize employers that misclassify their workers. Effective January 1, 2021, the Virginia Department of Taxation will determine whether a worker is an employee or an independent contractor by applying Internal Revenue Service (IRS) guidelines, which involve a multifactor analysis, the most important being the level of control exercised by a company. The Virginia Department of Taxation will determine whether a worker is an employee or an independent contractor by applying IRS guidelines, which involve a multifactor analysis, the most important being the level of control exercised by a company. For each assessment, the presumption will be that a worker who performs a service for an employer for pay will be considered an employee unless the individual or the employer demonstrates he or she is an independent contractor.
The Virginia law imposing penalties for employee misclassification won’t be the end of the story. Further efforts are likely to be forthcoming to crack down on employers that misclassify their workers and deny tax revenues to both states and the federal government. The impetus for the commonwealth to move quickly against employee ...

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