If your Virginia nonprofit regularly has more than two paid employees, meaning three or more, yes, it must carry workers compensation insurance. Being a tax-exempt charity does not change the rule; the Commission counts the workers of churches, charities, and nonprofits toward the more-than-two threshold just like any employer. The break for nonprofits is narrow: unpaid volunteers, and the noncompensated employees and noncompensated directors of a 501(c)(3) organization, are not counted, so an all-volunteer group often has no one it must cover.
Who this is for: Directors and operators of Virginia nonprofits, from an all-volunteer group to a charity with paid program and administrative staff.
The short version
- A nonprofit must carry workers comp once it regularly has more than two paid staff, meaning three or more.
- Tax-exempt status does not change this; nonprofit workers count toward the threshold like any employer.
- Unpaid volunteers, and noncompensated employees and directors of a 501(c)(3), are not counted.
- Grants, government contracts, and building leases frequently require proof of coverage on top of the law.
- Going without required coverage exposes the nonprofit to fines, a shutdown order, and lawsuits.
Paid staff, volunteers, and who counts
Workers comp covers employees, so the first question for a nonprofit is who is actually paid. Virginia counts paid staff toward the more-than-two threshold, so once you regularly have three or more paid employees, coverage is required, the same as for a for-profit business. Genuinely unpaid volunteers are not counted, and the statute specifically leaves out the noncompensated employees and noncompensated directors of a 501(c)(3) organization. If a volunteer or director receives a stipend or other pay for service, check that arrangement with the Commission, because pay can change the answer. If you want volunteers protected regardless, that is usually handled through other coverage, such as volunteer accident insurance, rather than workers comp.
What drives coverage for a nonprofit
| Situation | Is comp required? | Notes |
|---|---|---|
| All-volunteer, no paid staff | Usually no | Unpaid volunteers are not counted |
| One or two paid staff | Not yet | Under the more-than-two line; you may still choose to buy |
| Three or more paid staff | Yes | Required once you regularly reach three counted employees |
| Noncompensated directors of a 501(c)(3) | Not counted | Left out of the employee definition by statute |
The risk of going without
A nonprofit that skips required coverage faces the same enforcement as any Virginia employer. If a paid employee is injured and the organization carries no comp, the Commission can fine it up to 250 dollars a day, up to a 50,000 dollar cap plus costs, and order it to stop operating after a written notice. The injured worker can also choose to sue, with the nonprofit's usual defenses removed, and a judgment comes straight out of the mission's budget. Carrying comp makes it the employee's main remedy and generally blocks the lawsuit, which is why a nonprofit with three or more paid staff always insures them.
A Charlottesville example
Illustrative, not a quote. A Charlottesville youth-services nonprofit runs mostly on volunteers but employs three paid program coordinators. Because those three coordinators are paid employees, the nonprofit is over the more-than-two line and must carry coverage, and a city grant separately requires proof of it, so the organization buys a policy. The volunteers are handled through separate accident coverage. When a coordinator trips carrying supplies at an event, comp pays the medical bills and the nonprofit keeps its legal protection instead of facing a claim against its grant-funded budget. We help the organization rate its clerical and program payroll correctly so the premium fits a small staff. See our workers comp for nonprofits page.
Real questions Virginia owners ask
Does my Virginia nonprofit have to carry workers comp?
Once it regularly has more than two paid staff, meaning three or more, yes. A nonprofit is an employer like any other. An all-volunteer group with no paid staff usually has no one it must cover.
Does tax-exempt status change the workers comp rules?
No. Being a tax-exempt nonprofit does not change the requirement. A charity with three or more paid staff must carry coverage on the same more-than-two basis as a for-profit business.
Do we need comp if we only have volunteers?
Usually not. Genuinely unpaid volunteers are not counted toward the threshold, and Virginia specifically leaves out the noncompensated employees and directors of a 501(c)(3), so an all-volunteer group often has no one to cover.
How many paid staff before a nonprofit needs coverage?
Three. Virginia sets the line at more than two counted employees, so one or two paid staff is under it and three or more is over it. You may still choose to buy coverage before you reach three.
What if a volunteer or director receives a stipend?
That can change the answer, because pay for service is what the rule looks at. A stipend may make someone a counted employee, so check the arrangement with the Commission before assuming they are exempt.
Why do grants require workers comp?
Funders and government contracts require proof of coverage to protect themselves and the people the program serves. A Virginia nonprofit with three or more paid staff already needs it by law, and the grant confirms it.
What happens if our nonprofit skips coverage and a staffer is hurt?
The organization can be fined, ordered to stop operating, and sued with its usual defenses removed. A judgment would come out of the mission's budget, on top of the state penalties for being uninsured.
Why Virginia owners choose Morrow
- We shop the right market for you. In Virginia you buy workers' comp on the open market from any private carrier licensed in the state, because there is no state fund, and if no carrier will take you the NCCI-run assigned risk plan (the Virginia Workers' Compensation Insurance Plan) is the guaranteed fallback, so we can shop your rate freely and still have a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Virginia guides
Every Virginia business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Virginia (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- What workers comp does not cover
- Virginia nonprofit workers comp
This guide is general information, not legal advice. Virginia rules and penalty amounts can change, so verify current requirements with the Virginia Workers' Compensation Commission or a licensed advisor before you rely on them. Last updated: July 2026.