Virginia 2026 Employment Law Changes: A Small Business Guide

If you run a business in Virginia with five or more employees, July 1, 2026 quietly changed your legal exposure more than almost any other date in the past decade. A wave of new state laws took effect that touch job postings, non-compete agreements, workplace discrimination claims, retirement plans, and eventually paid leave — and unlike a lot of employment law updates, several of these have zero small-business carve-out. A five-person landscaping company and a 500-person logistics firm are now governed by the same rules.

Many owners find out about laws like this only after an applicant files a complaint or a departing employee's lawyer sends a letter. Here's what actually changed, who it applies to, and what to fix before it becomes a problem.

The Headline Change: Pay Transparency Is Now Mandatory​

Starting July 1, 2026, every job posting for a position based in Virginia — or open to remote candidates who could work from Virginia — must disclose a wage or salary range. This applies to internal postings (promotions, transfers) as well as public ones.

A few details matter more than they might seem:

• The range must be real. It has to reflect the actual pay scale or budgeted amount for the role, not a padded or speculative range meant to satisfy the letter of the law.
• There is no employer-size exemption. Unlike many states that only regulate employers above a certain headcount, Virginia's law applies to essentially any employer recruiting into the Commonwealth — including a two-person startup hiring its third employee remotely.
• Anyone can flag a violation, not just applicants. A written notice of a missing salary range triggers a 15-business-day cure period; if you fix the posting in that window, no lawsuit can proceed over that specific violation.
• Penalties escalate fast. The Virginia Attorney General can pursue civil penalties of $1,000 for a first violation and up to $5,000 for each subsequent one. Separately, an employee or applicant can sue directly within one year of the alleged violation — Virginia is one of relatively few states that allows a private right of action here, which raises the stakes considerably compared to states where only a state agency can enforce the rule.

Also banned as of the same date: asking candidates about their salary history. If a candidate volunteers it, you can consider it, but you can't request it as part of your hiring process — no more "what's your current salary?" on the application form.

What to do now: Audit every open posting (job boards, your careers page, internal intranet, LinkedIn) and add a real salary range today. Strip salary-history questions from applications, interview scripts, and background-check authorizations.

Non-Competes Just Got Much Riskier to Use​

Senate Bill 170 rewrote the rules for non-compete agreements in Virginia, and the change is retroactive in effect for anyone terminated without cause after July 1, 2026:

• A non-compete is now void unless the employer provides severance or another monetary payment tied specifically to the termination, and that payment obligation must be disclosed in the agreement itself when it's signed — not improvised later.
• Healthcare professionals are carved out entirely. Physicians, nurses, pharmacists, counselors, psychologists, and other practitioners licensed by a Virginia health regulatory board cannot be bound by a non-compete at all, regardless of seniority or role, for any agreement executed, renewed, or amended on or after July 1, 2026.
• The penalty for getting it wrong is steep: $10,000 per violation — and that applies even if the employer's legal team made a good-faith drafting mistake. If you have standard-form employment agreements with a non-compete clause, they almost certainly need a rewrite, not just a footnote.

If you're a small medical practice, dental office, therapy group, or home-health agency, assume your existing non-compete templates are now unenforceable and stop relying on them until they're revised by counsel.

The Change With the Widest Reach: A 5-Employee Discrimination Threshold​

This is arguably the most consequential shift for small businesses specifically. Senate Bill 637 expands the Virginia Human Rights Act (VHRA) to cover any employer with five or more employees, down from the previous 15-employee threshold. It also:

• Extends the deadline to file a discrimination complaint from 300 days to two years from the incident.
• Repeals a previous quirk that limited age-discrimination protection to employers with 5–20 employees — now every covered employer, regardless of size, is exposed to age-discrimination claims.
• Applies to all protected classes and all forms of unlawful discrimination and retaliation already codified under the VHRA.

Practically, this means thousands of Virginia businesses that were never previously subject to a state discrimination statute — because they sat under the 15-employee line — are now squarely covered. If you have five employees and no written anti-harassment or anti-discrimination policy, no documented complaint process, and no manager training on the topic, that gap is now a real legal exposure rather than a theoretical one.

What to do now: Put a written anti-discrimination and complaint-reporting policy in your employee handbook (or create a handbook if you don't have one), and make sure whoever handles HR — even if that's just you — knows how to document and respond to a complaint.

RetirePath Virginia: Now Mandatory at 5 Employees Too​

Less discussed but directly relevant to your books: RetirePath Virginia, the state's auto-IRA program, dropped its participation threshold from 25 employees to 5 employees. If you don't already sponsor a qualified retirement plan (401(k), SIMPLE IRA, etc.) and you have five or more employees, you're now required to either facilitate RetirePath payroll deductions or offer your own plan instead. Non-compliance carries a penalty of up to $200 per employee per year.

This is a payroll and bookkeeping change, not just an HR one — it adds a new payroll deduction category and a new compliance deadline to track alongside your existing withholding.

Coming Later: Paid Sick Leave and Paid Family Leave Insurance​

Two bigger programs won't hit most small employers immediately, but the clock has started:

Paid sick leave (SB 199) phases in by employer size: 50+ employees by July 1, 2027; 25+ employees by July 1, 2028; and every remaining employer by July 1, 2029. Employees accrue one hour of paid sick leave per 30 hours worked, capped at 40 hours a year, with carryover.

Paid Family and Medical Leave insurance (SB 2 / HB 1207) creates a state-run insurance fund offering up to 12 weeks of leave at 80% of wages (capped at the state average weekly wage), after 120 days of employment. It's funded by a payroll tax split between employer and employee — but employers with 10 or fewer employees are not required to pay the employer share of the premium. Payroll contributions begin around April 2028, with benefits available starting December 2028. The Virginia Employment Commission sets the actual contribution rate annually, with an early fiscal estimate around 0.75% of wages.

Neither program requires action today, but if you're budgeting multi-year payroll costs or building out a cap table for a growing team, both are worth modeling in now rather than discovering them as a surprise line item in 2027–2028.

A Worked Example: A 6-Person Marketing Agency​

It helps to see how these rules stack for an actual small business. Say you run a 6-person marketing agency in Richmond:

• You're now covered by the Virginia Human Rights Act (5-employee threshold), so you need a written anti-discrimination policy even though you never needed one at 15+.
• You're required to either enroll in RetirePath Virginia or sponsor your own retirement plan, since you're above the new 5-employee threshold there too.
• If you post a new "Account Manager" role, the listing must include a real salary range, and you can't ask finalists what they currently make.
• If one of your account managers has a non-compete from 2023, it's likely unenforceable as written unless you amend it to include a severance-payment clause — and simply forgetting to update it exposes you to a $10,000 penalty even without any intent to violate the law.
• You don't owe paid sick leave or paid family leave contributions yet — those phase in for employers your size in 2029 and 2028 respectively — but a business plan or investor pitch that models payroll costs through 2028 should account for them.

None of these individually is catastrophic, but together they represent five separate compliance items that simply didn't exist for a business your size a year ago. Missing even one — say, an outdated non-compete template your HR software auto-attached to a new hire's offer letter — creates real liability under the new penalty structure.

Frequently Asked Questions​

Do these laws apply if my business is headquartered outside Virginia but I have remote employees there? Yes. The pay transparency and salary-history rules apply to any position open to a Virginia-based candidate, regardless of where the company itself is headquartered. If your job posting is visible to remote applicants in Virginia, it needs a compliant salary range.

Is there a small-business exemption I'm missing? For pay transparency, non-competes, and the VHRA discrimination threshold, no — these apply based on the nature of the posting or the 5-employee headcount, not on revenue or industry. The paid sick leave and paid family leave programs are the main provisions with genuine size-based phase-ins and exemptions (the under-11-employee carve-out for the employer share of PFML premiums, for instance).

What's the single fastest fix if I haven't done anything yet? Start with job postings — they're public, easy for anyone to screenshot, and carry the most immediate private-lawsuit risk. Add real salary ranges today, then move to the anti-discrimination policy and non-compete review.

A Quick Compliance Checklist for July 2026​

1. Add a good-faith salary range to every open Virginia job posting; remove salary-history questions from applications and interviews.
2. Review and likely rewrite any non-compete agreements — especially for healthcare staff, who can no longer be bound by one at all.
3. Add or update a written anti-discrimination and complaint policy if you have five or more employees.
4. Confirm whether you need to enroll in RetirePath Virginia or sponsor your own retirement plan.
5. Calendar the 2027–2029 paid sick leave rollout and the 2028 paid family leave payroll tax start date so they don't blindside your payroll budget.

Keep Your Compliance Costs Visible in Your Books​

New payroll deductions, retirement plan contributions, and eventual paid-leave insurance premiums are exactly the kind of recurring obligations that get lost in a general "payroll expenses" bucket — until an auditor or a benefits provider asks for a clean history of what was withheld and when. Beancount.io gives you plain-text accounting where every payroll deduction, retirement contribution, and compliance-related expense is its own auditable line, version-controlled like code rather than buried in a black-box payroll report. Get started for free and keep your growing compliance obligations as easy to track as everything else in your ledger.