Title 58.1. Taxation
Subtitle I. Taxes Administered by the Department of Taxation
Chapter 19. Worker Misclassification
Chapter 19. Worker Misclassification.
§ 58.1-1900. Classification of employees.A. For the purposes of this title and Title 40.1, Title 60.2, and Title 65.2, if an individual performs services for an employer for remuneration, that individual shall be considered an employee of the party that pays that remuneration unless such individual or his employer demonstrates that such individual is an independent contractor. The Department shall determine whether an individual is an independent contractor by applying Internal Revenue Service guidelines.
B. Unless otherwise provided in this chapter, the Department shall administer this chapter according to the provisions of Article 16 (§ 58.1-460 et seq.) of Chapter 3, mutatis mutandis.
C. For the purposes of this chapter, all occurrences of misclassification of employees as described hereinafter made by the same employer at the same time, or within 72 hours, shall be deemed to be a single offense.
Any employer, or any officer or agent of the employer, that fails to properly classify an individual as an employee in accordance with § 58.1-1900 for purposes of this title, Title 40.1, Title 60.2, or Title 65.2 and fails to pay taxes, benefits, or other contributions required to be paid with respect to an employee shall, upon notice by the Department to the affected party, be subject to a civil penalty of up to $1,000 per misclassified individual for a first offense, up to $2,500 per misclassified individual for a second offense, and up to $5,000 per misclassified individual for a third or subsequent offense. Each civil penalty assessed under this chapter shall be paid into the general fund.
A. Whenever the Department determines that an employer failed to properly classify an individual as an employee under the provisions of § 58.1-1900, the Department shall notify such employer of the determination. This notification shall serve as an action by the Department with respect to debarment that allows the employer to apply for relief pursuant to §§ 58.1-1821 and 58.1-1825.
B. Upon an employer's subsequent violations of subsection A, and after all rights of administrative and judicial appeals have been exhausted or the time period for bringing such appeals has expired, the Department shall provide notice to all public bodies and covered institutions of the name of such employer. Public bodies and covered institutions shall not award a contract to such employer or to any firm, corporation, or partnership in which the employer has an interest in the following manner:
1. For a period of up to one year, as determined by the Department, from the date of the notice provided pursuant to this subsection for a second offense.
2. For a period of up to three years, as determined by the Department, from the date of the notice provided pursuant to this subsection for a third or subsequent offense.
No person shall require or request that an individual enter into an agreement or sign a document that results in the misclassification of the individual as an independent contractor or otherwise does not accurately reflect the relationship with the employer.
It shall be unlawful for an employer or any other party to discriminate in any manner or take adverse action against any person in retaliation for exercising rights protected under this chapter.
The Department shall report annually to the Governor and the General Assembly regarding compliance with and enforcement of this chapter. The Department's report shall include information regarding the number of investigated reports of worker misclassification; the findings of such reports; the amount of combined tax, interest, and fines collected; the number of referrals to the Department of Labor and Industry, Virginia Employment Commission, Department of Small Business and Supplier Diversity, Virginia Workers' Compensation Commission, and Department of Professional and Occupational Regulation; and the number of notifications of failure to properly classify to all public bodies and institutions.
