Virginia Employers Beware: New Employment Laws in Effect as of July 1, 2023

While the 2023 Virginia legislative session yielded fewer changes in Virginia law than in recent years, there were a handful of important updates made to employment law in the Commonwealth. These new laws took effect on July 1, 2023, and impact several areas of employment law, including requirements for certain restrictive covenant agreements, restrictions on the use of employee Social Security numbers, the implementation of organ donation leave, updates to minimum wage exemptions, and new subpoena powers given to the Virginia Employment Commission. Below is a summary of the changes employers should keep in mind, especially in revising their employee handbooks, policies, and nondisclosure, confidentiality, and non-disparagement agreements.

Sexual Harassment and Nondisclosure Agreements

Since 2019, employers have been prohibited from requiring employees or prospective employees to execute or renew any nondisclosure or confidentiality agreement that has the purpose or effect of concealing details related to claims of sexual assault as a condition of their employment. House Bill 1895 amended the applicable statute to expand this protection for workers in two important ways. Virginia Code § 40.1-28.01 was expanded to cover not only nondisclosure and confidentiality agreements, but also non-disparagement agreements, and it now covers sexual harassment claims in addition to claims of sexual assault.

This change to Virginia law comes on the heels of the passage of the federal Speak Out Act, signed into law by President Biden in December 2022. The Speak Out Act prevents the enforcement of any pre-dispute agreements that would hinder or dissuade employees from disclosing sexual assault or sexual harassment claims. While the Virginia law now conforms to the federal statute in that it addresses both sexual assault and sexual harassment claims, the Virginia law is arguably more expansive as it is not limited to pre-dispute agreements.

The Speak Out Act specifically prohibits only pre-dispute agreements, providing that “no nondisclosure clause or non-disparagement clause agreed to before the dispute arises shall be judicially enforceable.” However, the newly amended Virginia statute does not specify that its prohibition is limited to pre-dispute agreements. In relevant part, the Virginia statute provides that employers may not “require an employee or a prospective employee to execute or renew any provision in a nondisclosure or confidentiality agreement, including any provision relating to non-disparagement, that has the purpose or effect of concealing the details relating to a claim of sexual assault … or a claim of sexual harassment.” Because the Virginia law is only limited to agreements that are entered into “as a condition of employment” (and not solely pre-dispute agreements) it arguably applies to post-dispute agreements as well (i.e., settlement agreements), which could have a significant impact on how sexual misconduct allegations are addressed by employers.

Use of Employee Social Security Numbers

Employers in Virginia are now prohibited from using employees’ Social Security numbers, or any number “derivative thereof,” as a part of their employee identification number. The new law restricts employers from using employees’ Social Security numbers or derivative numbers on employee badges, access cards, or other similar methods of identification. Any violation of this new statute could result in a fine of up to $100 per violation. This new law most likely impacts organizations that use the last four numbers of employees’ SSNs in any identifying capacity.

Organ Donation Leave

Recently passed legislation requires employers with 50 or more employees to provide 60 business days of unpaid, job-protected leave to eligible employees who donate one or more of their organs and 30 business days of unpaid, job-protected leave to eligible employees who donate bone marrow. To be eligible for organ donation leave, employees must have been employed by the organization for at least twelve months and worked at least 1,250 hours in the past twelve months (both as of the date that the requested organ donation leave begins). To receive the organ donor leave, the employee must provide his or her employer with written verification from a physician that the employee is an organ or bone marrow donor and that there is a medical necessity for that donation.

The organ donation leave cannot be taken concurrently with leave under the Family and Medical Leave Act (“FMLA”). Similar to the protections afforded to employees under the FMLA, the leave cannot be considered a break in continuous service for purposes of determining rights to salary adjustments, sick leave, vacation, paid time off, annual leave, seniority, or other employee benefits. Employers are required to maintain coverage of a health benefit plan during the leave, and for commission-based employees, employers must pay the employee on leave any commission that becomes due because of the work the employee performed before taking organ donation leave.

The law prohibits retaliation against employees for requesting or taking leave or alleging a violation of the leave requirement. Knowing violations of the law can result in penalties of up to $1,000 for the first violation, $2,500 for the second violation, and $5,000 for any successive violation(s).

Sub-Minimum Wage Employees

Prior to July 1, 2023, pursuant to Virginia Code § 40.1-28.9 and Section 14(c) of the Fair Labor Standards Act (“FLSA”), employers that had applied for and obtained a special certificate issued by the federal government were permitted to pay certain employees with disabilities below minimum wage. As of July 1, this exception to the minimum wage requirement has been eliminated pursuant to House Bill 1924. However, this new law does not affect employers that already obtained their exemption under the FLSA prior to July 1; they will be permitted to continue to pay certain disabled individuals less than minimum wage until July 1, 2030, when the currently issued exemptions will expire. By July 1, 2030, all employee wages will need to comply with minimum wage standards.

Virginia Employment Commission Subpoena Power

Attorneys employed by the Virginia Employment Commission now have the authority to issue subpoenas. Under the new law, VEC attorneys may now compel the attendance of witnesses or the production of documents in connection with investigations or adjudications under the Virginia Unemployment Compensation Act. As with any attorney-issued subpoena, the new law permits a party to challenge the subpoena through a motion to quash in a Virginia trial court prior to the deadline set forth therein.

Kasey L. Hoare is an associate at Spotts Fain PC in the firm’s litigation practice group, with a primary focus in employment law.

Nancy Y. Simpson is an associate at Spotts Fain PC in the firm’s litigation practice group.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.