Employer’s Handbook

A guide to an employer’s rights and responsibilities under the Virginia Unemployment Compensation Act

INTRODUCTION

The Virginia Unemployment Compensation Act (Title §60.2 of the Code of Virginia) contains the provisions under which Virginia’s Unemployment Insurance Program is administered. Stemming from this Act is the Regulations and General Rules Affecting Unemployment Compensation, sections of which are cited in this handbook (Regulation 16 VAC). The Unemployment Compensation Act is available online at http://leg1·state·va·us/cgi-bin/legp504·exe?000+cod+TOC6002000.

This handbook is an attempt to explain the various statutory and procedural aspects of the program in non-technical terms. It does not have the effect of law and should not be so construed. Each passage of the handbook references the appropriate section of the Code or applicable regulation. Questions related to the program can be addressed to staff at any of the VEC Workforce Centers or to the appropriate section of our Richmond administrative office. Additional employer, job seeker, claimant, and labor market information is available on the VEC website at: www·VaEmploy·Com.

TAX INFORMATION

Display of Posters

Employers shall post and maintain in a place readily accessible to employees any poster furnished by the Virginia Employment Commission relating to unemployment insurance. Also, if an employer is later determined not liable, the poster must be removed. §60.2-106. A list of required posters (both Virginia and Federal) is available at http://www·vec·virginia·gov/vecportal/employer/pdf/reqemppost305·pdf

Who Is Liable

Not all employing units in Virginia are subject to the taxing provisions of the unemployment compensation law. Coverage (tax liability) is determined by the number of workers employed, the duration and nature of services performed, and the amount of wages paid for services in employment. Once the liability conditions are met for your type of employment, you are required to report the total payroll for the entire year, by quarter, and pay the appropriate amount of taxes. Regulation 16 VAC 5-20-10

You are automatically liable for coverage if you:

acquire a business, which is liable under the law; (You also may be responsible for any sum owed by the seller.)
are liable to the federal government for Federal Unemployment Tax (FUTA);
are a state, local government, or political subdivision. §60.2-210

Other than a domestic, or nonprofit employing unit: you are liable if you have one or more employees who work for any portion of a day in twenty different weeks in a calendar year, or if your total gross payroll for any calendar quarter is $1,500 or more. §60.2-210

Agricultural employing unit: you are liable if you employ ten or more workers for some portion of a day in twenty different weeks during a calendar year or if you have a payroll of $20,000 or more in a quarter. Either the farm operator or the crew leader can be the employer.

A farm operator is the employing unit if:

the individual is an employee of the farm operator or
the worker is furnished by the crew leader but is not treated as an employee of the crew leader, that is, the crew leader is acting on behalf of the farm operator rather than as an employer or
the crew leader has entered into a written agreement with the farm operator under which the crew leader is designated as an employee of the farm operator.

A crew leader is the employing unit if:

the crew leader holds a valid certificate of registration under the Migrant and Seasonal Agricultural Workers Protection Act of 1983 or
substantially all crew members operate or maintain tractors, mechanized harvesting or crop-dusting equipment or any other mechanized equipment provided by the crew leader, and
the individual is not an employee of any other person. §60.2-214

The services of alien workers are counted in determining your liability and those wages must also be reported. The Migrant and Seasonal Agricultural Act is available online at http://www·dol·gov/dol/compliance/comp-msawpa·htm

Domestic service or household employing unit: you are liable if you paid wages of $1,000 or more in wages in a quarter. The following occupations are usually considered as domestic service in private households, local college club or local chapter of a college fraternity or sorority:

Nanny, babysitters, sitters,
Cooks, laundresses, maids
Butlers, personal secretaries, managers of personal affairs, companions, porters, and nurses.
Caretakers, chauffeurs, and other maintenance workers

Example: If you hire a nanny to take care of your children in your home this person is your employee and you are required to file and pay taxes. Please see the IRS and State taxation websites for additional information regarding other tax liability.

Registered Nurses (RN) and Licensed Practical Nurses (LPN) are generally exempted from coverage. §60.2-215

Reimbursable Employers - The drawback to the reimbursable method is that the reimbursable employer may not be the separating employer, yet can be held responsible for benefits paid. If it is not the separating employer, only the computation of the bill can be appealed and not the reasons for the claimant’s separation from his employment.

Governmental and nonprofit organizations described in Section 501 (c)(3) of the Internal Revenue Code may choose either to pay taxes quarterly or to reimburse the Commission dollar-for-dollar for their proportionate share of benefits paid. All state agencies are reimbursable by order of the Governor. Liability is based on the reimbursable employer’s share of wages used to compute the claim. The drawback to the reimbursable method is that the reimbursable employer may not be the separating employer, yet can be held responsible for benefits paid. If it is not the separating employer, only the computation of the bill can be appealed and not the reasons for the claimant’s separation from his employment.

If the reimbursable method is chosen, it remains in effect for a minimum of one calendar year. The method can be changed by writing a letter, which must be received no later than December 1, to:

Virginia Employment Commission
Employer Accounts Unit Room 108
Post Office Box 1358
Richmond, VA 23218-1358

A reimbursable employer is notified by the form “Notice of Benefit Liability,” VEC-B-30R, of potential liability when a claimant files a claim using wages earned in reimbursable employment. A “Quarterly Reimbursable Billing,” VEC-B-47, is sent informing the employer of the amount due as a result of benefits paid. Appeals must be filed within thirty days from the date of billing. Reimbursable employers must submit a quarterly payroll even though no tax is due. Regulation 16 VAC 5-32-20

In order to qualify as a nonprofit organization for unemployment insurance purposes, you must have been granted a 501 (c) (3) exemption by the Internal Revenue Service. To be tax-exempt under § 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for purposes set forth in § 501(c)(3), and none of its earnings may inure to any private shareholder or individual. The exempt purposes set forth in § 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals. The application for 501(c)(3) status is Form 1023, Application For Recognition of Exemption, at http://www·irs·gov.

You are liable for unemployment insurance tax if you employ four or more workers in any portion of twenty different weeks in a calendar year. Non-profit organizations that are liable have the option to be tax paying or reimbursable. §60.2- 213 A, §60.2-501. Effective July 1, 2005, the Code of Virginia changed - §60.2-212 of the Code of Virginia was amended and reenacted as follows:

1. Any service including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied; and

2. Any service, of whatever nature, performed by an individual for any employing unit, for remuneration or under any contract of hire, written or oral, and irrespective of citizenship or residence of either,

a. Within the United States, or

b. On or in connection with an American vessel or American aircraft under a contract of service which is entered into within the United States or during the performance of which and while the individual is employed on the vessel or aircraft it touches at a port in the United States, if such individual performs such services on or in connection with such vessel or aircraft when outside the United States, provided that the operating office, from which the operations of the vessel or aircraft are ordinarily and regularly supervised, managed, directed or controlled, is within the Commonwealth.

B. Notwithstanding subdivision 2b of subsection A of this section, “employment” means all service performed by an officer or member of the crew of an American vessel on or in connection with such vessel, if the operating office from which the operations of such vessel operating on navigable waters within, or within and without, the United States are ordinarily and regularly supervised, managed, directed and controlled is within this the Commonwealth.

C. Services performed by an individual for remuneration shall be deemed to be employment subject to this title unless the Commission determines that such individual is not an employee for purposes of the Federal Insurance

Contributions Act and the Federal Unemployment Tax Act, based upon an application of the 20 factors set forth in Internal Revenue Service Revenue Ruling 87-41, issued pursuant to 26 C.F.R. 31.3306(i)-1 and 26 C.F.R. 31.3121(d)-1.

D. Notwithstanding the provisions of subsection C, an individual who performs services as a real estate salesperson, under direction of a real estate broker under Chapter 21 (§54.1-2100 et seq.) of Title 54.1, or as a real estate appraiser under Chapter 20.1 (§54.1-2009 et seq.) of Title 54.1 pursuant to an executed independent contractor agreement and for remuneration solely by way of commission or fee, shall not be an employee for purposes of this chapter.

Those services that are not part of the regular operation of the business are generally considered outside the usual course of the business. An established business within the meaning of the Code is one that is permanent, fixed, stable, or lasting. There are some things that you can do which may help you in determining if a person is a bona fide independent contractor. First:

Ask for his federal and state identification numbers;
Look at his business license;
Ask for his business calling card;
Determine if he is listed in the business section of the local telephone directory;

Then:
Call your nearest VEC Workforce Center and ask the Tax Representative to review your operations and render a determination. The list of VEC offices is available on line at: http://www·vec·virginia·gov/vecportal/field/field_offices·cfm

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Table of Contents Employer’s Handbook Localized & Non-localized... Voluntary Election of Coverage Total Tax Rate Acquisitions Reporting Requirements Benefits Information SEPARATION ISSUES Overpayments Special Programs And Services Alien Labor Certification... Tax & Benefit Rate... Useful links	Employer’s Handbook A guide to an employer’s rights and responsibilities under the Virginia Unemployment Compensation Act INTRODUCTION The Virginia Unemployment Compensation Act (Title §60.2 of the Code of Virginia) contains the provisions under which Virginia’s Unemployment Insurance Program is administered. Stemming from this Act is the Regulations and General Rules Affecting Unemployment Compensation, sections of which are cited in this handbook (Regulation 16 VAC). The Unemployment Compensation Act is available online at http://leg1·state·va·us/cgi-bin/legp504·exe?000+cod+TOC6002000. This handbook is an attempt to explain the various statutory and procedural aspects of the program in non-technical terms. It does not have the effect of law and should not be so construed. Each passage of the handbook references the appropriate section of the Code or applicable regulation. Questions related to the program can be addressed to staff at any of the VEC Workforce Centers or to the appropriate section of our Richmond administrative office. Additional employer, job seeker, claimant, and labor market information is available on the VEC website at: www·VaEmploy·Com. TAX INFORMATION Display of Posters Employers shall post and maintain in a place readily accessible to employees any poster furnished by the Virginia Employment Commission relating to unemployment insurance. Also, if an employer is later determined not liable, the poster must be removed. §60.2-106. A list of required posters (both Virginia and Federal) is available at http://www·vec·virginia·gov/vecportal/employer/pdf/reqemppost305·pdf Who Is Liable Not all employing units in Virginia are subject to the taxing provisions of the unemployment compensation law. Coverage (tax liability) is determined by the number of workers employed, the duration and nature of services performed, and the amount of wages paid for services in employment. Once the liability conditions are met for your type of employment, you are required to report the total payroll for the entire year, by quarter, and pay the appropriate amount of taxes. Regulation 16 VAC 5-20-10 You are automatically liable for coverage if you: acquire a business, which is liable under the law; (You also may be responsible for any sum owed by the seller.) are liable to the federal government for Federal Unemployment Tax (FUTA); are a state, local government, or political subdivision. §60.2-210 Other than a domestic, or nonprofit employing unit: you are liable if you have one or more employees who work for any portion of a day in twenty different weeks in a calendar year, or if your total gross payroll for any calendar quarter is $1,500 or more. §60.2-210 Agricultural employing unit: you are liable if you employ ten or more workers for some portion of a day in twenty different weeks during a calendar year or if you have a payroll of $20,000 or more in a quarter. Either the farm operator or the crew leader can be the employer. A farm operator is the employing unit if: the individual is an employee of the farm operator or the worker is furnished by the crew leader but is not treated as an employee of the crew leader, that is, the crew leader is acting on behalf of the farm operator rather than as an employer or the crew leader has entered into a written agreement with the farm operator under which the crew leader is designated as an employee of the farm operator. A crew leader is the employing unit if: the crew leader holds a valid certificate of registration under the Migrant and Seasonal Agricultural Workers Protection Act of 1983 or substantially all crew members operate or maintain tractors, mechanized harvesting or crop-dusting equipment or any other mechanized equipment provided by the crew leader, and the individual is not an employee of any other person. §60.2-214 The services of alien workers are counted in determining your liability and those wages must also be reported. The Migrant and Seasonal Agricultural Act is available online at http://www·dol·gov/dol/compliance/comp-msawpa·htm Domestic service or household employing unit: you are liable if you paid wages of $1,000 or more in wages in a quarter. The following occupations are usually considered as domestic service in private households, local college club or local chapter of a college fraternity or sorority: Nanny, babysitters, sitters, Cooks, laundresses, maids Butlers, personal secretaries, managers of personal affairs, companions, porters, and nurses. Caretakers, chauffeurs, and other maintenance workers Example: If you hire a nanny to take care of your children in your home this person is your employee and you are required to file and pay taxes. Please see the IRS and State taxation websites for additional information regarding other tax liability. Registered Nurses (RN) and Licensed Practical Nurses (LPN) are generally exempted from coverage. §60.2-215 Reimbursable Employers - The drawback to the reimbursable method is that the reimbursable employer may not be the separating employer, yet can be held responsible for benefits paid. If it is not the separating employer, only the computation of the bill can be appealed and not the reasons for the claimant’s separation from his employment. Governmental and nonprofit organizations described in Section 501 (c)(3) of the Internal Revenue Code may choose either to pay taxes quarterly or to reimburse the Commission dollar-for-dollar for their proportionate share of benefits paid. All state agencies are reimbursable by order of the Governor. Liability is based on the reimbursable employer’s share of wages used to compute the claim. The drawback to the reimbursable method is that the reimbursable employer may not be the separating employer, yet can be held responsible for benefits paid. If it is not the separating employer, only the computation of the bill can be appealed and not the reasons for the claimant’s separation from his employment. If the reimbursable method is chosen, it remains in effect for a minimum of one calendar year. The method can be changed by writing a letter, which must be received no later than December 1, to: Virginia Employment Commission Employer Accounts Unit Room 108 Post Office Box 1358 Richmond, VA 23218-1358 A reimbursable employer is notified by the form “Notice of Benefit Liability,” VEC-B-30R, of potential liability when a claimant files a claim using wages earned in reimbursable employment. A “Quarterly Reimbursable Billing,” VEC-B-47, is sent informing the employer of the amount due as a result of benefits paid. Appeals must be filed within thirty days from the date of billing. Reimbursable employers must submit a quarterly payroll even though no tax is due. Regulation 16 VAC 5-32-20 In order to qualify as a nonprofit organization for unemployment insurance purposes, you must have been granted a 501 (c) (3) exemption by the Internal Revenue Service. To be tax-exempt under § 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for purposes set forth in § 501(c)(3), and none of its earnings may inure to any private shareholder or individual. The exempt purposes set forth in § 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals. The application for 501(c)(3) status is Form 1023, Application For Recognition of Exemption, at http://www·irs·gov. You are liable for unemployment insurance tax if you employ four or more workers in any portion of twenty different weeks in a calendar year. Non-profit organizations that are liable have the option to be tax paying or reimbursable. §60.2- 213 A, §60.2-501. Effective July 1, 2005, the Code of Virginia changed - §60.2-212 of the Code of Virginia was amended and reenacted as follows: 1. Any service including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied; and 2. Any service, of whatever nature, performed by an individual for any employing unit, for remuneration or under any contract of hire, written or oral, and irrespective of citizenship or residence of either, a. Within the United States, or b. On or in connection with an American vessel or American aircraft under a contract of service which is entered into within the United States or during the performance of which and while the individual is employed on the vessel or aircraft it touches at a port in the United States, if such individual performs such services on or in connection with such vessel or aircraft when outside the United States, provided that the operating office, from which the operations of the vessel or aircraft are ordinarily and regularly supervised, managed, directed or controlled, is within the Commonwealth. B. Notwithstanding subdivision 2b of subsection A of this section, “employment” means all service performed by an officer or member of the crew of an American vessel on or in connection with such vessel, if the operating office from which the operations of such vessel operating on navigable waters within, or within and without, the United States are ordinarily and regularly supervised, managed, directed and controlled is within this the Commonwealth. C. Services performed by an individual for remuneration shall be deemed to be employment subject to this title unless the Commission determines that such individual is not an employee for purposes of the Federal Insurance Contributions Act and the Federal Unemployment Tax Act, based upon an application of the 20 factors set forth in Internal Revenue Service Revenue Ruling 87-41, issued pursuant to 26 C.F.R. 31.3306(i)-1 and 26 C.F.R. 31.3121(d)-1. D. Notwithstanding the provisions of subsection C, an individual who performs services as a real estate salesperson, under direction of a real estate broker under Chapter 21 (§54.1-2100 et seq.) of Title 54.1, or as a real estate appraiser under Chapter 20.1 (§54.1-2009 et seq.) of Title 54.1 pursuant to an executed independent contractor agreement and for remuneration solely by way of commission or fee, shall not be an employee for purposes of this chapter. Those services that are not part of the regular operation of the business are generally considered outside the usual course of the business. An established business within the meaning of the Code is one that is permanent, fixed, stable, or lasting. There are some things that you can do which may help you in determining if a person is a bona fide independent contractor. First: Ask for his federal and state identification numbers; Look at his business license; Ask for his business calling card; Determine if he is listed in the business section of the local telephone directory; Then: Call your nearest VEC Workforce Center and ask the Tax Representative to review your operations and render a determination. The list of VEC offices is available on line at: http://www·vec·virginia·gov/vecportal/field/field_offices·cfm back to top Next page
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