Client Alert: New Virginia Labor & Employment Laws (2026 Legislative Updates)

Virginia employers should prepare for a period of meaningful change in Virginia labor and employment laws.  Following the 2026 legislative session, Governor Spanberger has signed into law a broad package of measures that will expand employee rights and impose new compliance obligations across several key areas, including paid leave, compensation practices, wage-and-hour enforcement, and restrictive covenants.

This alert highlights several of the most significant legislative developments and provides practical guidance to help employers assess risk and prepare for compliance ahead of upcoming effective dates.

Expansion of Paid Sick Leave Effective July 1, 2027

Virginia currently requires paid sick leave only for certain home health workers providing personal care, respite, or companion services.  However, Governor Spanberger recently signed into law House Bill (“HB”) 5 and Senate Bill (“SB”) 199, which extend paid sick leave obligations to nearly all private employers.  The legislation, which will go into effect in July 2027, allows for employees to accrue paid sick leave based on hours worked, generally earning one (1) hour of leave for every thirty (30) hours worked, with an annual accrual cap of forty (40) hours.  Accrued leave may be carried over from year to year, but employees may not use more than forty hours of paid sick leave in a single year unless the employer permits a higher limit.  Paid sick leave can be used for an employee’s own medical care, to care for a family member, or for certain situations involving domestic violence, sexual assault, or stalking.  The new law will also require employers to permit use of paid sick leave in hourly increments, unless the employer allows leave to be taken in smaller increments. Additional guidance from the Virginia Employment Commission is expected in advance of the effective date to assist employers with implementation.

Notably, employers are prohibited from taking adverse action against employees for taking protected paid sick leave.  As a result, employers will need to exercise additional care when making attendance-related disciplinary or termination decisions to ensure that protected absences are not considered.  An absence covered by the paid sick leave law may not result in a negative action under an employer’s attendance policy.  

A notable but underreported component of the law is the requirement that paid sick leave can be compensated at the employee’s “regular rate” of pay as defined under the Fair Labor Standards Act.  For non-exempt employees who earn non-discretionary bonuses, commissions, shift differentials, or other amounts above their standard hourly wage, this means that the employee will be paid at a higher rate when on paid sick leave than when working a regular shift or taking separate vacation leave.  For example, an hourly employee who earns $25.00 per hour and works 40 hours, but who also receives a $100 weekly bonus, will need to be paid $27.50 per hour for paid sick leave, instead of $25.00 per hour ($1100 in total weekly earnings divided by 40 hours worked).  This requirement will create payroll challenges and will make it important to distinguish between covered sick leave and other forms of leave such as vacation or PTO for non-covered reasons.  Many employers will need to update their leave policies to ensure compliance, and we recommend that employers work with their employment counsel to consider changes before the end of 2026.

Statewide Paid Family and Medical Leave Program

In addition to paid sick leave, Virginia has enacted a statewide paid family and medical leave (“PFML”) insurance program.  Under the new framework, including companion bills HB 1207 and SB 2, eligible employees will receive up to twelve (12) weeks of partially paid leave – up to 80% of average weekly wages – for qualifying events such as childbirth, serious health conditions, or caregiving responsibilities.  Unlike employer-funded leave, this program will be financed through payroll contributions shared by employers and employees, although employers who offer a private plan can apply for an exemption to the contribution requirement.  Employer/employee payroll contributions begin in 2028, with benefits available beginning in 2029.  Following passage in the General Assembly, Governor Spanberger proposed amendments to clarify how the program will be developed and implemented, align the framework more closely with federal policy, define eligibility and key terms, and provide employers with greater certainty regarding program administration.  The General Assembly approved of the Governor’s amendments, and this legislation will become effective on July 1, 2026, with compliance obligations starting in 2028.   

Employers should begin factoring potential payroll costs into long term projections and consider how state benefits could interact with existing leave policies, the federal Family and Medical Leave Act, and employer-provided parental or disability leave programs.

Pay Transparency and Limits on Salary History Inquiries- Effective July 1, 2026

Governor Spanberger recently signed into law HB 636, along with its companion bill SB 215, prohibiting employers from requesting or relying on an applicant’s compensation history when making hiring or pay decisions, and requiring employers to publish good faith compensation ranges when posting a position.  The new requirements will take effect on July 1, 2026.

As amended, the legislation includes a limited exception allowing employers to consider salary history only if an applicant voluntarily discloses it, without prompting, after an initial offer has been made, and only to support a higher salary.    

The enacted legislation also requires employers to include good faith pay ranges in all job postings, including internal postings.  In addition, the law creates a private right of action, subject to limited cure provisions in certain circumstances.  The statute provides the primary compliance framework, and it is unclear whether additional regulatory guidance will be issued.

For now, employers should prepare to post good faith salary ranges in external and internal job postings, and review application materials to ensure no materials request salary history.   Recruiters and hiring managers may require updated training to avoid prohibited inquiries and informal practices that could create legal exposure.

Minimum Wage Increases and Expanded Wage-and-Hour Protections

Additional legislation, most notably HB 1 and SB 1, has been signed into law by Governor Spanberger which will phase in a minimum wage to $15.00 per hour by January 1, 2028.  The legislation establishes a phased increase in the minimum wage, starting at $12.77 effective January 1, 2026, increasing to $13.75 effective January 1, 2027, and reaching $15.00 per hour in 2028.  Beginning in 2029, the minimum wage will be adjusted annually based on inflation (Consumer Price Index).  In addition, Governor Spanberger signed into law SB 121, eliminating certain exemptions from Virginia’s minimum wage law, including exemptions for farm laborers and employees and certain temporary foreign workers.  The Governor also signed HB 238, which will strengthen wage-and-hour enforcement by expanding remedies and enforcement mechanisms for wage-and-hour and misclassification claims.  Among other changes, the bill authorizes liquidated and treble damages and extends the statute of limitations for such claims to three years.

Employers should evaluate wage rates, overtime practices, and exemption classifications, particularly for positions near minimum wage thresholds.

Further Limits on Non-Compete and Restrictive Covenants-  Effective July 1, 2026

Virginia has previously limited the use of non-compete agreements, especially for lower-wage and non-exempt workers.  Governor Spanberger has signed SB 170 into law, which prohibits enforcement of non-compete agreements (likely including non-solicitation of employee provisions) against even high wage workers who are terminated without “Cause”, unless such employer provides severance or other compensation specifically tied to the non-compete, which must be listed in the non-compete agreement itself.   In practice, the law will require employers to evaluate whether to offer severance or additional pay in order to preserve the ability to enforce a non-compete provision and certain non-solicitation provision in the event a termination without cause.  Nearly all non-compete agreements applicable to Virginia employees or applying Virginia law must be amended for use after July 1, 2026.   We recommend that you reach out to your employment counsel as soon as possible to arrange for such changes.  

Additionally, Governor Spanberger signed into law SB 128, which imposes additional restrictions on non-compete agreements for certain licensed healthcare professionals.  Healthcare employers should reach out to their counsel as soon as possible to discuss strategy going forward.  

SB 170 takes effect July 1, 2026, and it is not retroactive, meaning that it will not affect agreements signed prior to July 1, 2026.  However, almost every Virginia employer who uses non-competes will need to revise them before July 1, 2026.   Many employers with older agreements may consider trying to get new ones signed before the new law goes into effect on July 1, 2026.  We strongly recommend that employers reach out to their employment counsel to consider changes to their non-competes in the near future.

Anti-Discrimination

Virginia lawmakers advanced measures that will significantly expand the scope and procedures governing discrimination claims under the Virginia Human Rights Act (the “VHRA”).  Governor Spanberger signed into law  HB 925, which extends the timeline for filing a charge with the Virginia Office of Civil Rights beyond the current 300 days to two (2) years and permits employees to initiate litigation after 180 days if a charge is filed with a local human rights agency.  This legislation reflects a broader trend of expanding employee access to remedies and a corresponding increase in potential exposure for employers.   

Additionally, the Governor has signed SB 637, which will amend the VHRA by expanding the scope of covered employers for certain discrimination claims.  Among other changes, the bill will lower the employee-count threshold for domestic worker claims from fifteen (15) to five (5) employees and extend age discrimination coverage to employers with as few as five (5) employees.  Employers should accordingly anticipate longer investigation timelines and revisit their record retention, internal investigation, and risk management practices.

Voluntary Emergency Responders

SB 100, which was signed into law by the Governor, establishes new statutory protection for employees who serve as voluntary emergency responders during declared emergencies.  The law prohibits employers from retaliating against employees who miss work due to such service and authorizes affected employees to seek reinstatement and recovery of lost wages.  Applicable across several industries, the measure underscores the need for employers to review attendance, discipline, and leave policies to ensure supervisors are equipped to appropriately address absences related to emergency services during declared emergencies.

What This Means for Employers

Against this backdrop of expanded statutory obligations and increased enforcement risk, Virginia employers should take proactive steps to mitigate risk.

• Review existing non-compete and restrictive covenant agreements for Virginia employees, many of which may require revision under recent and pending changes and consider whether updated agreements should be implemented and executed before July 2026 where appropriate.
• Review and revise handbooks and leave policies to prepare for paid sick leave and family leave insurance.  Some employers may wish to separate PTO into separate vacation and sick leave banks to make it easier to track legally protected sick leave, which must be paid at the “regular rate.”
• Prepare to remove any salary history questions from applications, and to post salary ranges in job postings, if you are not already doing so.

We will continue to track these developments closely and are glad to assist in evaluating how these potential changes may affect employers’ operations and workforce.  You should feel free to contact any member of our employment law team if you would like guidance in preparing for any of these developments.