Employing units that are not subject to the taxing provisions of the law may submit an application for voluntary election of coverage to the Virginia Employment Commission. If the Commission approves the application, the employing unit becomes liable for at least two full calendar years and is bound by the laws and regulations in the same manner as other covered employers. The election will be approved beginning with the current year. §60.2-510
Successors
An individual or employing unit is termed a successor upon acquiring the organization, trade, or business of another (the predecessor). If the law covered the predecessor, the successor is automatically covered regardless of the number of workers in its employ. The successor may be held responsible for sums owed by the predecessor. The amount will not exceed the value of the acquired assets. §60.2-210, §60.2-523
Termination
An employing unit remains liable from year to year until officially released by the Commission. An employer may request in writing that its account be terminated provided its account reflects that the preceding year’s employment experience warrants termination. §60.2-509
Unemployment Taxable Wage Base
You pay state unemployment tax only on the first $8,000 of wages earned for each employee during a calendar year.
Wages
The term “wages” for the purpose of unemployment insurance means:
- all sums payable, including wages, salary, commissions, and tips;
- cash value of all other forms of remuneration, such as board and lodging; (The value of meals and lodging furnished should not be included if furnished at the employer’s premises for the convenience of the employer.) §60.2-229, Regulation 16 VAC 5-10-10
- special payments such as annual bonuses, severance pay, and back pay. §60.2-229(A)
Sick Pay-Under a Plan
Payments by an employer to a worker for sickness or accident disability that are paid under a plan shall be included as wages, with the exception of such payments made under the provisions of a workers˜ compensation law. §60.2-229(B)(2)
Sick Pay-No Plan
Any amount paid by an employer because of sickness, or accident disability, or medical or hospitalization expenses where no formal plan exists will constitute taxable wages for six calendar months, with the exception of payments under a workers˜ compensation law. After the expiration of six calendar months, such sick pay does not constitute wages. §60.2- 229(B)
Experience Rating
Experience rating is a system used to establish employer tax rates based on past employment and unemployment experience. §60.2-530, §60.2-531
New Employers
The new employer base tax rate will be 2.5% until that employer becomes eligible for a computed rate. Eligibility for a computed rate occurs when an employer has a taxable payroll for at least a 12-month period ending June 30. Rates are then computed to be effective on the upcoming January 1. Foreign (out-of-state) contractors must pay the maximum tax rate for three years; their accounts are then eligible for computation. §60.2-526 (B), §60.2-527
Out-of-state contractors and highway contractors will be assigned the maximum allowable tax rate for three years. An “out-of-state contractor” is defined in § 54.1-1100 of the Code of Virginia. An out-of-state “highway contractor” is defined in § 33.1-337 of the Code and does not maintain a principal place of business in Virginia. Such employer need not be a member of any highway contractors’ association