Virginia Employers Face Major Workplace Policy Shifts Under New Gov’t Leadership: How to Prepare Now

Takeaways

• Virginia’s new Democratic majority is advancing major employment-law changes, including minimum wage increases, expanded coverage for wage and hour claims, broadened whistleblower protections, and wider application of age‑discrimination laws.
• Lawmakers propose sweeping new leave and worker‑protection mandates, including paid sick leave for all employees, paid family and medical leave insurance program, expanded overtime rights, and potential repeal of right‑to‑work laws.
• Additional proposals would limit non‑competes, increase hiring transparency, create new discrimination and accommodation rights, and regulate employer use of AI in hiring and employment decisions.

Article

Virginia employers potentially face the most significant overhaul of workplace laws in decades. With unified Democratic control of the executive branch and General Assembly, lawmakers have reintroduced numerous previously vetoed proposals and advanced new legislation to reshape the litigation landscape for employers.

The Democratic majority has signaled its intent to make Virginia more accommodating to employees. From proposed changes affecting wage and hour rules to leave entitlements, union rights, and even rules on the use of artificial intelligence (AI) in employment decisions, employers should brace for substantial disruption.

Below is an overview of the most consequential proposals and what employers could do now to prepare.

Minimum Wage Increase, Exemption Repeals, Age-Related Claims

House Bill (HB) 1 and Senate Bill (SB) 1 propose amendments to increase the minimum wage beginning Jan. 1, 2026, to $12.77 an hour, then increase to $13.75 an hour in 2027, and $15 in 2028. SB 121 would repeal minimum wage exemptions for farm workers and certain temporary foreign workers, expanding coverage. Employers should consider budgeting for possible increased labor costs should the bills pass.

HB 948 proposes incorporating Code § 40.1 29(J) into the Virginia Minimum Wage Act to strengthen enforcement of minimum wage laws. HB 1355 seeks to clarify the statutory definition of “wage” and expressly reverse the Virginia Supreme Court’s decision in Groundworks Operations, LLC v. Campbell, No. 241092 (Dec. 30, 2025), signaling the legislature’s discomfort with judicial narrowing of wage claim theories.

HB 722 would amend Code § 40.1 27.3 to clarify whistleblower protections by defining a “federal or state law or regulation” when an employee reports a legal violation. The bill also seeks to make clear that whistleblower protections do not apply to claims involving retaliation over workplace safety or health rights.

Finally, SB 637 would reduce the employee threshold for defining an employer of domestic workers under the Virginia Human Rights Act (VHRA) from 15 to five workers for each working day. The bill would also repeal the current limits on age-related claims to cover any employer with at least five employees. Current law limits age-related claims to employers with between five and 20 employees. This bill is likely to pass.

Paid Sick Leave Expansion, Statewide Paid Family and Medical Leave Insurance Program

HB 5 would expand the scope of paid sick leave beyond home health workers to all employees. Employees would accrue one hour of leave for every 30 hours worked, and the reasons for the use of leave would be expanded to include mental or physical illnesses, injury, caregiving, or services related to domestic violence, sexual assault, or stalking. HB 5 would impose penalties for noncompliance.

Complementing HB 5, SB 2 proposes a statewide paid family and medical leave insurance program that would provide up to 12 weeks of paid leave at 80 percent of an employee’s average weekly wage, funded through employer and employee payroll premiums beginning in 2028, with benefits starting in 2029. Similar efforts were vetoed in prior sessions, but passage of these bills is expected.

Collective Action, Overtime, Worker Classification

Labor protections would continue to expand through SB 28, which seeks to include domestic employees, such as housekeepers and nannies, under Virginia’s overtime statute. Meanwhile, SB 32 aims to repeal Virginia’s long-standing right-to-work law, which currently prohibits employment agreements requiring union membership as a condition of employment. The proposal faces an uphill battle, but employers should monitor developments closely.

Additionally, HB 1451 renews efforts to regulate productivity quotas and strengthen wage enforcement for warehouse employees. Similar measures have gained traction in other states and are likely to return in Virginia.

Restrictive Covenants, Hiring Practices

The General Assembly is likely to pass several bills limiting the use of non-compete agreements. SB 128 proposes new restrictions on covenants not to compete impacting certain healthcare workers. Doctors, nurses, and pharmacists likely will be exempted from non-compete agreements.

SB 170 would prohibit the enforcement of a non-compete against an employee who was discharged and not offered a severance. This bill is likely to pass. Employers would have to choose between offering severance or avoid enforcing a non-compete agreement.

Hiring transparency is addressed in HB 1164, which would prohibit prospective employers from seeking an applicant’s wage history. If passed, Virginia would align with a growing number of jurisdictions seeking to curb pay inequity.

Emerging Rights, New Causes of Action

Several bills would expand substantive employment rights while opening new avenues for litigation. HB 1173 would require reasonable accommodations related to menopause. HB 1364 would prohibit employment discrimination against members of the General Assembly for performing their legislative duties.

SB 637 would lower the threshold for employer coverage under the VHRA from 15 employees or 20 employees to five.

HB 1314 proposes a state level analogue to 42 U.S.C. § 1983, potentially exposing employers and governmental entities to constitutional style employment claims.

AI Regulation

Finally, Virginia legislators seek to regulate the use of AI in employment decisions — an area the state has targeted in recent years. Many employers use AI to cull voluminous numbers of job applications to reach hiring decisions more quickly. HB 999 would prohibit any person from deploying, using, or relying on an automated decision system that results in discrimination based on protected characteristics in the VHRA, reflecting heightened legislative concern over algorithmic bias and automated adverse actions. Employers would be responsible for the AI model’s decisions, even if they used a vendor’s services.

Employers relying on AI assisted hiring or assessment tools should watch this space closely, as they could be required to conduct risk assessments, disclose AI use, and, potentially, provide appeal mechanisms for adverse decisions.

Implications for Employers

Virginia’s 2026 legislative session, scheduled to adjourn on March 14, promises to reshape labor standards and workplace regulations. The session is scheduled to reconvene on April 22 to consider the governor’s actions on bills and budget items.

Employers that monitor developments can better prepare and position their businesses to ensure compliance, minimize risk, and maintain a competitive edge.

Jackson Lewis attorneys are closely monitoring updates and changes to legal requirements and guidance and are available to help employers weed through the complexities involved with state-specific or multistate-compliant plans.

(Law Graduate Nina Bundy contributed to this article.)