Washington compliance for founders using VAs

Summary: Comprehensive, Washington-specific compliance guidance for founders hiring virtual assistants (VAs). Key points and practical checklist are below.

Executive summary and practical guidance 1) Worker classification (employee vs independent contractor) - Use both Washington and federal tests. Washington L&I: a 2-step approach — first the Personal Labor Test; if that fails use the 6-part (or 7-part for construction) test.

All parts must be met for a worker to be exempt from WA workers’ compensation. Document how each contractor passes each part of the applicable test. (If unclear, the IRS Form SS-8 can be filed.) - IRS common-law factors: behavioral, financial, and type-of-relationship categories — weigh the whole relationship and document the analysis. 2) Washington workers’ compensation and unemployment - All workers in Washington are presumed entitled to workers’ compensation unless they meet narrow exemption definitions.

A 1099 does not determine WA coverage. If a worker in Washington must be covered, the business must obtain a WA workers’ compensation account and report hours/pay on quarterly reports; failure to report can trigger liability for unpaid premiums, penalties and interest. - For out-of-state or remote workers: working outside Washington is generally not covered by WA workers’ comp, but not all out-of-state work is outside WA jurisdiction — check L&I’s out-of-state guidance. - Employers hiring workers in WA (including remote workers who reside in WA) generally must register as an employer with the Employment Security Department (ESD) for unemployment insurance reporting and taxes. 3) State and local registration and tax obligations - Register your business with Washington Department of Revenue / Business Licensing Service (use the Business Licensing Wizard) to get required city/state licenses and to indicate you have workers for workers’ comp.

Washington has no personal income tax but has B&O tax and possible sales/use tax obligations; hiring remote VAs does not automatically create WA B&O nexus, but hiring employees in WA or having sufficient nexus can trigger registration. - City-level rules (Seattle) can add obligations: Seattle’s Office of Labor Standards enforces Minimum Wage and Paid Sick & Safe Time and has app-based worker protections; if a VA resides or performs work in Seattle, city ordinances may apply (including 2025 minimum wage increases and paid sick time rules). 4) Federal tax forms and foreign contractors - For U.S. independent contractors, collect Form W-9 and issue Form 1099-NEC for reportable payments (if they meet IRS thresholds).

For ambiguous cases, the IRS provides guidance on determining employee vs independent contractor status and recommends documenting behavioral/financial/type-of-relationship factors; consider Form SS-8 if needed. - For foreign (nonresident) contractors, obtain Form W-8BEN (or appropriate W-8 series) and follow IRS rules for withholding on U.S.-source payments; many foreign contractor payments are not U.S.-sourced and thus not reportable on Form 1099-NEC, but withholding and reporting depend on residency, source rules, and any tax treaty — consult IRS guidance and a tax advisor. 5) Contracts, IP, confidentiality, and practical best practices - Use a written contractor agreement that: (a) clearly sets status (contractor vs employee) but does not create control inconsistent with independent contractor status; (b) assigns IP and ensures work-for-hire or assignment of inventions; (c) includes confidentiality and data security obligations (encryption, access limits, data handling); (d) sets payment terms and expense responsibilities; (e) includes indemnity and insurance requirements where appropriate. - Require contractors to maintain their own business registrations, carry business insurance where appropriate, and provide evidence (W-9/W-8, invoices, copies of business licenses if available). - Keep careful documentation demonstrating independence (invoices, marketing materials showing independent business, multiple clients, separate office, ability to set own hours, tools/equipment ownership).

These records are critical if classification is audited.

Summary: Comprehensive, Washington-specific compliance guidance for founders hiring virtual assistants (VAs). Key points and practical checklist are below.

Executive summary and practical guidance 1) Worker classification (employee vs independent contractor) - Use both Washington and federal tests. Washington L&I: a 2-step approach — first the Personal Labor Test; if that fails use the 6-part (or 7-part for construction) test.

All parts must be met for a worker to be exempt from WA workers’ compensation. Document how each contractor passes each part of the applicable test. (If unclear, the IRS Form SS-8 can be filed.)

2) Washington workers’ compensation and unemployment - All workers in Washington are presumed entitled to workers’ compensation unless they meet narrow exemption definitions. A 1099 does not determine WA coverage.

If a worker in Washington must be covered, the business must obtain a WA workers’ compensation account and report hours/pay on quarterly reports; failure to report can trigger liability for unpaid premiums, penalties and interest.

3) State and local registration and tax obligations

- City-level rules (Seattle) can add obligations: Seattle’s Office of Labor Standards enforces Minimum Wage and Paid Sick & Safe Time and has app-based worker protections; if a VA resides or performs work in Seattle, city ordinances may apply (including 2025 minimum wage increases and paid sick time rules). 4) Federal tax forms and foreign contractors - For U.S. independent contractors, collect Form W-9 and issue Form 1099-NEC for reportable payments (if they meet IRS thresholds).

For ambiguous cases, the IRS provides guidance on determining employee vs independent contractor status and recommends documenting behavioral/financial/type-of-relationship factors; consider Form SS-8 if needed. - For foreign (nonresident) contractors, obtain Form W-8BEN (or appropriate W-8 series) and follow IRS rules for withholding on U.S.-source payments; many foreign contractor payments are not U.S.-sourced and thus not reportable on Form 1099-NEC, but withholding and reporting depend on residency, source rules, and any tax treaty — consult IRS guidance and a tax advisor. 5) Contracts, IP, confidentiality, and practical best practices

- Require contractors to maintain their own business registrations, carry business insurance where appropriate, and provide evidence (W-9/W-8, invoices, copies of business licenses if available).

• IRS common-law factors: behavioral, financial, and type-of-relationship categories — weigh the whole relationship and document the analysis.
• For out-of-state or remote workers: working outside Washington is generally not covered by WA workers’ comp, but not all out-of-state work is outside WA jurisdiction — check L&I’s out-of-state guidance.
• Employers hiring workers in WA (including remote workers who reside in WA) generally must register as an employer with the Employment Security Department (ESD) for unemployment insurance reporting and taxes.
• Register your business with Washington Department of Revenue / Business Licensing Service (use the Business Licensing Wizard) to get required city/state licenses and to indicate you have workers for workers’ comp. Washington has no personal income tax but has B&O tax and possible sales/use tax obligations; hiring remote VAs does not automatically create WA B&O nexus, but hiring employees in WA or having sufficient nexus can trigger registration.
• Use a written contractor agreement that: (a) clearly sets status (contractor vs employee) but does not create control inconsistent with independent contractor status; (b) assigns IP and ensures work-for-hire or assignment of inventions; (c) includes confidentiality and data security obligations (encryption, access limits, data handling); (d) sets payment terms and expense responsibilities; (e) includes indemnity and insurance requirements where appropriate.
• Keep careful documentation demonstrating independence (invoices, marketing materials showing independent business, multiple clients, separate office, ability to set own hours, tools/equipment ownership). These records are critical if classification is audited.

Data privacy and breach notification - Washington AG provides data breach resources and enforces state-level privacy/breach notification obligations — if VAs handle personal data of Washington residents or your business holds data, ensure the contract requires prompt breach reporting and remediation, and follow state breach notification requirements.

Noncompete and restrictive covenants - Washington’s noncompetition covenant statute (RCW Chapter 49.62) restricts enforceability of noncompetes and includes specific provisions about when covenants are void or unenforceable and special rules for independent contractors. Review RCW 49.62 and ensure any restrictive covenant complies with state definitions, monetary thresholds, and exceptions. 8) Hiring international VAs - If the VA is located outside the U.S., U.S. founders generally avoid U.S. payroll taxes and WA workers’ comp obligations if the worker performs all services outside WA/US, but careful review of source-of-pay rules and local employment laws is needed. Consider Employer-of-Record (EOR)/PEO for hiring as an employee in another country or when you want the vendor to assume payroll, benefits and local compliance. Practical checklist for Washington founders hiring VAs - Step 1

Determine worker location and role (where the VA lives/works and whether services are performed in WA). - Step 2: Conduct a written classification analysis using WA L&I tests and IRS common-law factors; document the results. - Step 3: If worker is in WA and does not meet exemption tests, register for WA workers’ comp and report hours; contact L&I if unclear. - Step 4: Register as an employer with ESD (unemployment) and with DOR/Business Licensing Service as needed; use the Business Licensing Wizard to identify permits. - Step 5: Collect W-9 (US) or W-8 (foreign), issue 1099-NEC where required; consult tax advisor for foreign withholding rules. - Step 6: Use a clear written agreement covering IP assignment, confidentiality, scope, payment, termination, and liability; avoid day-to-day control inconsistent with independent contractor status. - Step 7: If VA handles personal data, include security requirements, breach notification obligations, and verify compliance with WA AG data breach rules. - Step 8: For VAs in Seattle or other WA localities, confirm compliance with local minimum wage, paid sick leave and app-based worker ordinances. - Step 9: Periodically re-check classification and compliance and maintain evidence (invoices, contracts, marketing materials, business registrations). - Step 10: If in doubt, get legal or payroll/PEO counsel; consider filing IRS Form SS-8 or participating in VCSP if reclassifying workers. Recommended blog outline (for the user’s content needs) - Intro: Why founders hire VAs and why WA-specific compliance matters - Section 1: Employee vs contractor — WA and federal tests with examples for VAs - Section 2: Workers’ comp and unemployment obligations in Washington (including remote/out-of-state nuances) - Section 3: Tax and reporting (W-9, 1099-NEC, W-8, withholding for foreign contractors) - Section 4: Local rules (Seattle/Tacoma minimum wage & paid sick leave) and B&O tax basics - Section 5: Data privacy, breach notification, and contracts (IP/NDAs) - Section 6: Hiring international VAs — PEO/EOR options and risk mitigation - Section 7: Compliance checklist and templates/resources - Conclusion and call to action: when to consult counsel or payroll provider