As of July 1, 2026, Virginia employers face significant changes to the Commonwealth’s wage-and-hour laws through the enactment of HB 238. This omnibus bill is a sweeping overhaul of Virginia’s wage-and-hour framework, and its reach is broad. HB 238 covers everything from how claims are pursued to what counts as wages and how the government can investigate suspected violations.
Here’s a summary of what employers need to know:
Standardized Remedies and Limitations Periods
Historically, the remedies and procedural requirements applicable to wage claims varied depending on the nature of the claim. Under HB 238, that patchwork approach gives way to a standard framework. Claims involving minimum wage violations, overtime violations, and the misclassification of employees as independent contractors are now all subject to the same remedial framework under the Virginia Wage Payment Act (VWPA): a three-year statute of limitations, the ability to pursue collective actions, and access to the same enhanced damages and attorneys’ fee provisions.
Expanded Definition of “Employer”
HB 238 expands the definition of “employer” to include any person acting directly or indirectly in the interest of an employer in relation to an employee. This definition is drawn directly from the Fair Labor Standards Act. By aligning Virginia’s definition with the federal standard, the amendment may create individual liability for supervisors and managers in circumstances where Virginia law previously provided no such exposure.
Expanded Definition of Wages
HB 238 significantly broadens the definition of “wages” under Virginia law. The term now encompasses virtually all forms of compensation owed by an employer to an employee, including hourly wages, minimum wages, piece-rate compensation, day rates, salaries, overtime pay, prevailing wages required by law, commissions, tips, bonuses, and damages arising from worker misclassification.
The expansion of the definition to include commissions is a direct legislative response to the Virginia Supreme Court’s 2025 decision in Groundworks Operations, LLC v. Campbell, which had excluded commission payments from VWPA coverage. By expressly defining commissions as wages, the General Assembly effectively overturned that holding.
Expanded Remedies for Employees
HB 238 considerably strengthens the remedies available to employees pursuing wage-and-hour claims. Prevailing plaintiffs may recover unpaid wages, liquidated damages equal to twice the unpaid wages, prejudgment interest, and reasonable attorneys’ fees and costs. For knowing violations, courts may award liquidated damages equal to three times the unpaid wages.
Increased Exposure for Worker Misclassification
The General Assembly also took direct aim at the misclassification of employees as independent contractors. Individuals who successfully challenge an improper classification may now pursue the full range of remedies available under the VWPA, including the enhanced damages and fee-shifting provisions discussed above.
New Recordkeeping Requirements
For work performed on or after July 1, 2026, employers must maintain paystubs or electronic payroll records for at least three years. The change appears designed to align with the new three-year limitations period, ensuring that the records needed to defend a claim remain available throughout the window in which a claim can be brought.
Reduced Burden for Wage Theft Enforcement
Previously, the Commissioner of Labor and Industry or the Attorney General could pursue criminal penalties only by demonstrating that an employer acted both willfully and with intent to defraud. HB 238 relaxes that conjunctive standard, permitting criminal liability to be established through proof of either willfulness or intent to defraud. Although this change may appear subtle, it lowers the burden for enforcement authorities and may make wage theft actions easier to pursue.
HB 238 also targets repeat offenders by attaching felony liability to repeat violations regardless of the dollar amount involved.
HB 238 gives both the Virginia Commissioner of Labor and Industry and the Attorney General broader authority to investigate and enforce the Commonwealth’s wage-and-hour laws. The Commissioner may now open an investigation based on an employee complaint, information from a third party, or the Commissioner’s own discretion. The Commissioner, or the Commissioner’s representative, is now expressly authorized to enter an employer’s premises to inspect records relating to suspected wage-and-hour violations.
If the Commissioner concludes there is a good-faith basis to believe a violation has occurred, the agency may pursue administrative enforcement proceedings or file suit seeking remedies available under the VWPA. The Attorney General, in turn, is now authorized to bring actions directly on behalf of aggrieved employees, further expanding the Commonwealth’s enforcement capabilities.
Limited Good Faith Defense for Employers
HB 238 creates a limited good-faith defense for employers facing wage-and-hour claims. To invoke it, an employer must show both that it acted in good faith and that it had reasonable grounds for believing its conduct complied with the law. The defense is available only if the employer cures the violation within 14 days of receiving notice by paying all unlawfully withheld wages.
If established, the defense may shield an employer from additional damages or penalties. In practice, it is most likely to benefit employers that have the systems in place to quickly identify, investigate, and correct payroll errors once a potential violation is flagged.
Overtime Compliance Requirements
HB 238 expressly incorporates the overtime requirements of the Fair Labor Standards Act into Virginia law. Employers that violate those requirements may now face the same remedies and penalties available for other wage-payment violations under the VWPA.
Prohibition on Double Recovery
Although HB 238 significantly expands the remedies available to employees, it includes a safeguard against duplicative recoveries. An employee who recovers damages through an enforcement action brought by the Commissioner or the Attorney General may not recover the same damages again in a separate civil action.
Practical Takeaways for Employers
With the July 1, 2026 effective date in effect, Virginia employers should ensure they are:
- Auditing payroll practices and classification decisions. Review how commissions, day rates, and piece-rate compensation are tracked and paid, and revisit any independent contractor classifications in light of the enhanced misclassification remedies.
- Upgrading recordkeeping. Confirm that payroll systems can produce complete records for a three-year lookback period for all work performed on or after July 1, 2026.
- Assessing individual liability. Evaluate whether supervisors and managers face personal exposure under the expanded “employer” definition and consider whether training or structural changes are warranted.
- Building a rapid-response process for wage complaints. The good-faith defense requires a cure within 14 days of notice, and employers without a defined internal process are unlikely to meet that window.
- Taking criminal exposure seriously. Recurring payroll issues are no longer just a civil litigation risk, given the new either/or liability standard and felony exposure for repeat offenders.
The lawyers at MHS are available to assist with any policy review or modification in light of the changes coming under HB 238.