Current through Register Vol. XLI, No. 38, September 20, 2024
Section 85-8-6 - Employees Covered; Independent Contractors; Coverage Elections; and Assignment6.1. General. A West Virginia workers' compensation policy must cover all of the employees of the insured employer who are required to be provided West Virginia workers' compensation coverage under chapter twenty-three of the West Virginia Code and the rules promulgated thereunder.6.2. Independent Contractors.6.2.1. A West Virginia workers' compensation policy issued to an insured employer is not required to cover persons hired and classified as independent contractors pursuant to the West Virginia Employment Law Worker Classification Act, as set forth in W.Va. Code § 21-51-1et seq., and the test established within W.Va. Code § 21-51-4 for classification of independent contractors.6.2.2. Self-insured employers are not required to provide workers' compensation coverage to persons hired and classified as independent contractors pursuant to the West Virginia Employment Law Worker Classification Act, as set forth in W.Va. Code § 21-51-1et seq., and the test established within W.Va. Code § 21-51-4 for classification of independent contractors.6.2.3. A person cannot simultaneously be classified as an employee and as an independent contractor of the same employer at the same time.6.2.4. An employer is not required to classify a worker who meets the criteria contained within W.Va. Code § 21-51-4 as an independent contractor. The employer may choose to hire the worker as an employee. However, the terms should be clearly set forth at the outset so there is no confusion between the employer and the hired worker in regard to the hired worker's status.6.2.5. Independent contractors are not employees of employers required to be covered under chapter twenty-three of the West Virginia Code and are not eligible to receive payments from the Workers' Compensation Uninsured Employer Fund established in W.Va. Code § 23-2C-8.6.3. Elections not to provide coverage. Elections not to provide coverage to certain individuals, such as partners of a partnership, sole proprietors, members and certain investors in limited liability companies or certain corporate officers, are governed by the provisions of W.Va. Code §§ 23-2-1(g) and 31B-12-1207.6.3.1. An employer may elect not to provide coverage for certain corporate officers and all members of a corporation's board of directors. A corporate officer or member of a corporate board of directors elected out of coverage by an employer is not entitled to the benefits of the West Virginia Workers ' Compensation Act, chapter twenty-three of the West Virginia Code. 6.3.1.a. The employers' election out of coverage of officers of a corporation is limited to four (4) principal officers for the employer: (4) treasurer. The four (4) principal officers must be elected or appointed by the corporation's board of directors as prescribed by the corporate bylaws. The employer may elect these four (4) officers out of coverage even though their activities include work that is ordinarily performed by an officer and work that is ordinarily performed by a worker, an administrator or other employee who is not an officer. An officer who performs both types of activities (officer/worker, administrator, or other employee who is not an officer) is deemed to be working in a "dual capacity."6.3.1.b. No other officer or assistant officer engaged in dual capacity may be elected out of coverage.6.3.1.c. Dual capacity is determined by the duties of the officer employee. For an officer other than the four (4) principal officers stated in subdivision 6.3.1.a of this rule to be eligible to be elected out of coverage, that officer cannot have duties and perform work that also would ordinarily be done by a worker, administrator or other employee who is not an officer. It is the employer's burden to show that duties performed by officers or assistant officers other than the four (4) principal officers are not dual capacity activities and that the work could only be performed by an officer of a corporation. Examples of such showings are a vice president within a corporation (not the one vice president allowed to be elected out of coverage as one of the four (4) principal officers) who only attends board meetings and an assistant secretary whose only job is to affix the corporate seal to corporate papers.6.3.1.d. Members of corporate boards of directors may be elected out of coverage by an employer, regardless of whether the member of the board of directors works in a dual capacity. It is the employer's burden to show that the individual elected out of coverage is, in fact, a member of the board of directors and is, in fact, vested with the authority to manage the affairs of the corporation as a member of the employer's board of directors. Members of corporate boards of directors who do not receive "gross wages" from the employer for their activities are not "employees" within the meaning of chapter twenty-three of the West Virginia Code and are not entitled to the benefits of chapter twenty-three of the West Virginia Code.6.3.2. Certain members of a limited liability company may be elected out of coverage by an employer. "Limited liability companies" include those entities created pursuant to the Uniform Limited Liability Company Act of chapter thirty-one b of the West Virginia Code. These entities consist of all forms of limited liability companies, including, but not limited to, manager-managed limited liability companies, member-managed limited liability companies, foreign limited liability companies and professional limited liability companies. 6.3.2.a. Limited liability companies may elect not to include as an employee for purposes of workers' compensation coverage a total of not more than four (4) persons. Each of the persons elected out of coverage by the employer is required to be acting in the capacity of a manager, officer or member of the limited liability company.6.3.2.b. All covered members of limited liability companies which are treated as partnerships for federal income tax purposes are subject to the calculation of premiums on the members as provided for partners in a partnership in W. Va. Code § 23-2-1b.6.4. Manner of notification. In the event of an election under W. Va. Code § 23-2-1(g) and section 6.3 of this rule, the employer shall provide to the private carrier written notice naming the positions that are not to be covered and the names and social security numbers of the individuals occupying those positions. The employer shall not include such individuals' gross wages for premium purposes in future payroll reports. The partner(s), member/manager(s), proprietor(s) or corporate or executive officer(s) named in the notification is not deemed an employee within the meaning of chapter twenty-three of the West Virginia Code after such notice has been served.6.4.1. Elections not to be covered made under section 6.3 of this rule are effective for the next policy period after the written notification in this section is received by the private carrier and each policy period thereafter with the same private carrier without subsequent written notification.6.4.2. Elections not to be covered are valid only for the individuals named in the written notice provided for in section 6.4 of this rule. An election is not valid for any individual who may later hold the same position, office or title until an amendment to the election is made in accordance with this rule.6.4.3. Amendments to a written notification of an election may be made only for the purpose of; 6.4.3.a. Changing the named person for any office or position previously reported on the election; or6.4.3.b. Making an election for persons who were not previously employed as a sole proprietor, partner, officer, or member of the board of directors on the date the election was made; or6.4.3.c. Making an election upon changing private carriers; Provided, That an employer must disclose the written notification, in its entirety, to the new private carrier prior to the effective date of the insurance policy; or6.4.3.d. Adding a person who has previously elected not to be covered under the provisions of section 6.3 of this rule if the private carrier receives written notification sixty (60) days prior to the coverage period in which coverage is sought. If written notification is not received by the private carrier sixty (60) days prior to the coverage period in which coverage is sought, then coverage shall not be extended to such person requesting coverage beginning that coverage period, but shall instead be extended to the following coverage period. The written notification shall clearly identify the coverage period in which coverage is sought to begin.6.5. Owners and officers; Coverage denials when the employer is in default. 6.5.1. Employers that are required, but fail to maintain West Virginia workers' compensation coverage shall not be afforded coverage for the employers' partners, members, proprietor or corporate or executive officers, nor shall coverage or benefits be afforded through the Uninsured Employers' Fund or any other fund of the Insurance Commissioner to any individual for whom the employer may elect to forego coverage under the provisions of W. Va. Code § 23-2-1(g) including, but not limited to, members of corporate boards of directors or certain members of a limited liability company.6.5.2. Employers who are in Old Fund, Uninsured Employers' Fund or policy default shall not be afforded workers' compensation coverage for the employers' partners, members, proprietor or corporate or executive officers, nor shall coverage or benefits be afforded through the Uninsured Fund or any other fund of the Insurance Commissioner to any individuals for whom the employer may elect to forego coverage under the provisions of W. Va. Code § 23-2-1(g) including, but not limited to, members of corporate boards of directors or members of a limited liability company.6.5.2.a. Coverage for the individuals specified in this subsection shall not be afforded if the employer is in Old Fund, Uninsured Employers' Fund or policy default on the date of injury, and this exclusion will continue for the life of that injury. For example, if, at some time after the date of injury, the employer cures its default status, an individual specified in this subsection that incurs an injury on a date while the employer was in default status will not be covered for the injury that occurred during the period of default, and benefits will never be payable for that injury.6.5.2.b. Benefits paid during periods of Old Fund, Uninsured Fund or policy default for individuals denied coverage under this subsection shall be considered overpayments.6.6. Duty to report all payroll. 6.6.1. Each employer has a duty to report the entire payroll of all employees to its private carrier.6.6.2. The private carrier may make its own initial decision regarding the determination of all issues relevant to the classification of employees, rates and payroll; Provided, That any employer that disagrees with the decision made by its private carrier and is not able to reasonably resolve the dispute may file a protest with the Insurance Commissioner's designated rating organization for workers' compensation, or, in the event that the dispute involves issues of State law which the rating organization refuses to resolve, with the Insurance Commissioner. All private carriers issuing final decisions to insured employers on matters discussed in this subsection shall provide clear instructions to the insured employer regarding the procedure for filing a protest to the private carriers' decision.6.6.3. Nothing in this subsection shall be construed to permit an employer to deviate from the procedures set forth in section 6.4 of this rule regarding elections not to provide coverage to certain individuals.6.7. Limited partner. A "limited partner" as defined and provided by the Uniform Limited Partnership Act (W. Va. Code § 47-9-1et seq.) is not an employee of an employer which is a limited partnership subject to the mandatory or elective provisions of chapter twenty-three of the West Virginia Code, unless that person is employed in the service of the limited partnership for the purpose of carrying on the industry, business, service or work in which it is engaged.6.8. Investors. A person who is solely an investor and who does not participate in the direction, administration, or control of a business or venture and its activities or investments is not an employee of an employer subject to the mandatory or elective provisions of chapter twenty-three of the West Virginia Code, unless that person is employed in the service of the business or venture for the purpose of carrying on the industry, business, service or work in which it is engaged.