Subcontracting to Out-of-State Contractor (Labor Laws)

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Subcontracting to Out-of-State Contractor (Labor Laws)

Post by dabretty » Mon Jan 13, 2020 10:51 am

I'm a single-member LLC.

In my state (NM), I do not need to carry workers' compensation insurance as I do not meet the required threshold ("three or more workers").

A larger contractor that I'm looking to subcontract to is located in Virginia, however with 100% of the work to be performed here in NM. This contractor is telling me that I must carry workers' compensation insurance to abide by their state's law (in VA).

Two questions arise out of this:

(1) If this work is being performed entirely in NM, and I'm a NM-based LLC, which state law would apply? VA (home of the contractor) or NM?

(2) I believe Virginia has the exact same (three or more workers) requirement as NM does, anyway, and I don't need it to abide by their law (if even applicable)? ... FAQs_1.pdf

Anyways, it looks like I don't need it (at least based upon #2), but I'd like to better understand #1.


Silk McCue
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Re: Subcontracting to Out-of-State Contractor (Labor Laws)

Post by Silk McCue » Mon Jan 13, 2020 11:26 am

IANAL but from reading the document you provided I am inclined to believe that the large contractor is obligated to make certain that your employees have workers comp. The highlighted sentence seems to trigger that your team be covered by WC.
Q: Am I required to obtain workers’ compensation insurance?

A: Virginia law requires that an employer who regularly employs more than two part-time or full-time employees carry workers' compensation. If a business hires subcontractors to perform the same trade, business or occupation, or to fulfill a contract, the subcontractor’s employees are included when determining the total number of employees for coverage requirements. Executive officers also count as employees. If the total number of all employees is more than two, workers’ compensation is required. Workers’ compensation is mandatory for those employers who meet the requirements under the law.
I am certainly not declaring that my interpretation is correct.

I expect that the contractor isn't willing to take the risk. You could discuss with them why they believe this is required.


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