2023 HOLIDAY TO REACH RECORD SPENDING LEVELS

1. Minimum wage trajectory (HB 1/SB 1)

The current rate of $12.77/hour is codified, with scheduled increases to $13.75 on January 1, 2027 and $15.00 on January 1, 2028. Annual CPI adjustments begin January 1, 2029.

What to do: Build the increases into 2027 and 2028 payroll budgets now. Audit your wage compression — workers above minimum but below $15 may need adjustments to maintain pay structure.

2. Pay transparency and wage history ban (HB 636/SB 215)

Wage ranges required in all public and internal postings effective July 1. Pay history inquiries prohibited.

See our June 11 deep dive for the full seven-step checklist.

3. Virginia Human Rights Act expansion (HB 925/SB 637) — the sleeper

First, a quick definition. The Virginia Human Rights Act, or VHRA, is Virginia’s state-level employment discrimination law — the state analog to federal civil rights laws like Title VII and the Americans with Disabilities Act. It prohibits employers from discriminating against employees or applicants based on protected characteristics including race, color, religion, national origin, sex (including pregnancy), age, marital status, sexual orientation, gender identity, disability, military status, and source of income. It covers the full employment relationship: hiring, firing, promotion, pay, benefits, working conditions, and termination. Employees may file complaints with the Virginia Office of Civil Rights or bring a civil action seeking lost wages, compensatory damages, attorney fees, and in some cases punitive damages.

Historically, the VHRA applied only to employers with 15 or more employees for most claims, paralleling Title VII coverage. The 2026 changes shift that line down — significantly.

What’s changing:

• • Statute of limitations extended from 300 days to two years for discrimination charges
  • Suits can be filed based on an EEOC Right-to-Sue letter alone, bypassing the Virginia Office of Civil Rights administrative process
  • Many small-employer exemptions eliminated — businesses with 5 or more employees are now covered for many claims (down from 15)

What to do: If you have fewer than 15 employees and historically considered the VHRA inapplicable, that assumption is gone. Review handbooks, complaint procedures, and EEO training.

4. Paid sick leave — phased in 2027 through 2029 (HB 5/SB 199)

Mandates one hour of paid sick leave per 30 hours worked, with a 40-hour annual cap on accrual and use (carryover allowed; employers may set a higher cap). The mandate phases in by employer size:

• • July 1, 2027: Employers with 50 or more employees
  • January 1, 2028: Employers with 25 or more employees
  • January 1, 2029: All employers with at least one employee

Key provisions:

• • Existing PTO policies that meet the law’s requirements satisfy the obligation — no additional sick leave needed if your current policy already provides equivalent paid leave for the same covered uses
  • Frontloading 40 hours at the start of each year is an option in lieu of accrual tracking
  • Employers cannot require employees to find a replacement worker or work an alternate shift in exchange for sick leave
  • Anti-retaliation provisions with private right of action and a 2-year statute of limitations
  • Civil penalties up to $500 per knowing violation; aggrieved employees may recover double the amount of unpaid sick leave plus actual damages and attorney fees
  • Implementing regulations from the Commissioner of Labor and Industry due by July 1, 2027

Narrow exceptions: Home health workers already covered under the existing 2021 law remain under that statute. Part-time and per diem licensed healthcare workers at certain Department of Health–licensed facilities (and at UVA Medical Center, VCU Health System Authority, and DBHDS-licensed agencies) are also exempted. These exceptions do not apply to typical independent business members.

What to do: Most independent businesses have until January 1, 2029 — roughly two and a half years of runway. Use it to inventory existing PTO and sick leave policies. If your current policy provides at least 40 hours of paid leave per year that employees can use for illness, family care, and qualifying domestic violence, sexual assault, or stalking situations, you may already be compliant. If not, plan for either an accrual system or a frontloading approach.

5. Wage payment civil actions expanded (HB 238)

Existing civil action remedies for unpaid wages — including triple damages for knowing violations and attorney fees — now extend to minimum wage, overtime, worker misclassification, and prevailing wage violations. Attorney General enforcement authority added.

What to do: Audit independent contractor classifications. The financial exposure for misclassification just got substantially larger.

6. Heat illness prevention (HB 1092/SB 288)

Safety and Health Codes Board is directed to adopt regulations requiring heat illness prevention plans for both indoor and outdoor work. Applies more broadly than weather-exposed industries — kitchens, warehouses without climate control, and indoor manufacturing are in scope.

What to do: Watch for the rulemaking process. Identify any roles in your business where heat exposure is a factor.

7. Non-compete severance rule (SB 170)

Non-competes are unenforceable against employees discharged without cause unless severance benefits or monetary payment were disclosed at signing. Applies to agreements entered into on or after July 1, 2026.

What to do: If you use non-competes, update your template to disclose severance terms upfront. Existing agreements are not affected, but any new or renewed agreement after July 1 must include the disclosure.

8. Voluntary emergency responder protections (SB 100)

Employers cannot retaliate against employees absent to serve as voluntary emergency responders during declared emergencies. Employers are not required to pay for the missed time; affected employees may use paid sick or vacation time.

What to do: Add a one-line policy to your handbook. Train supervisors who handle attendance issues.

A high-priority callout: state IRA program now mandatory at 5+ employees (HB 176/SB 149)

The state-facilitated IRA savings program — RetirePath Virginia, administered by the Commonwealth Savers Plan — is mandatory for eligible Virginia employers. As of July 1, 2026, the eligible-employer threshold drops from 25 employees to 5 employees, and the previous requirement that participating employees work at least 30 hours per week is eliminated. An estimated 35,000 newly eligible Virginia businesses will receive registration notices starting in July 2026.

Who must comply: Virginia businesses that (1) have 5 or more employees, (2) have been operating for at least 2 years, and (3) do not already offer a qualified employer-sponsored retirement plan such as a 401(k).

The two-path obligation: Eligible employers must either:

1. Register with RetirePath Virginia and facilitate payroll deductions for employees who do not opt out, or
2. Establish a qualified retirement plan of their own and certify an exemption with RetirePath

Penalty for non-compliance: Up to $200 per eligible employee per year.

What to do:

• • Watch your mail and email starting in July for a registration notice with a unique access code and deadline
  • If you do not already offer a retirement plan, decide between participating in RetirePath or establishing your own plan
  • If you already offer a qualified plan, certify an exemption with RetirePath when you receive notice
  • The program charges no employer fees and is structured as a Roth IRA with auto-enrollment, automatic escalation, and minimal administrative requirements

Two specialized callouts: 

• • Healthcare practices: SB 128/HB 627 prohibits non-competes for licensed medical, nursing, counseling, optometry, psychology, and social work professionals. Sale-of-business carveouts and narrow client non-solicits remain permissible.
  • Franchisors and franchisees: HB 69/SB 240 requires retail franchise agreements to be governed by Virginia law and prohibits post-termination competition restrictions except in connection with sale.

What’s next: Thursday we go deep on the most comprehensive change of the session — Virginia’s new statewide paid family and medical leave insurance program. Premium collection and benefits begin in 2028, but employers should be planning now.

The bottom line: Most of these changes require modest policy updates and one or two budget conversations. The exception is the VHRA expansion, which deserves a closer look from any business under 15 employees that previously did not have formal EEO procedures.

This communication is provided for general informational purposes only and does not constitute legal advice. Statutory citations and effective dates reflect the bills as enacted by the 2026 Virginia General Assembly. Member businesses should consult qualified legal counsel for guidance on specific compliance obligations applicable to their circumstances.