Virginia Expands Benefits for Locked-Out Workers

On April 13, 2026, the Virginia Governor signed Senate Bill (SB) 433, amending Virginia’s unemployment insurance law to create an exception to the labor dispute disqualification when a worker is unemployed due to an employer lockout rather than a strike.

Under prior law, many labor-dispute-related work stoppages could disqualify workers from unemployment benefits; SB 433 changes that treatment for lockouts, meaning locked-out workers may qualify for benefits during a labor dispute.

This update applies to Virginia employers subject to state unemployment insurance requirements and takes effect on July 1, 2026.

What Employers Need to Do

• Review and update unemployment claims response procedures to accurately classify work stoppages as “lockouts” versus “strikes” for proper claims administration.

• Assess the financial and operational impact of potential unemployment claims during lockouts, including possible effects on experience-rated unemployment tax rates.

• Maintain thorough records of union communications and bargaining conduct to support any statutory exceptions the employer may need to invoke.

• Reevaluate labor strategy and negotiation planning, as employees involved in a lockout may now have access to unemployment benefits.

• Train HR, labor relations, and compliance teams on the new eligibility rules and exception criteria.

Overview

What Changed: SB 433 amends Virginia’s unemployment insurance law to create an exception to the labor dispute disqualification when a worker is unemployed due to an employer lockout rather than a strike. Previously, many labor-dispute-related work stoppages could disqualify workers from benefits.

Who is Covered: The statute applies broadly under Virginia unemployment insurance law, which covers private-sector employers subject to state UI requirements and certain other covered employers under Virginia law (such as some public employers, depending on program coverage).

Key Definitions

• A lockout occurs when an employer prevents employees from working during a labor dispute.
• A strike is when employees voluntarily stop working.

Impact on Eligibility: Workers who are unemployed due to a lockout may be eligible for unemployment benefits if they otherwise meet the applicable unemployment insurance eligibility requirements.

Administration and Enforcement: Additional guidance regarding claims administration and documentation requirements may be issued by the Virginia Employment Commission.

Why This Matters

SB 433 shifts how unemployment insurance interacts with employer lockouts, meaning lockouts now carry direct unemployment insurance cost implications and can raise experience ratings if more claims are approved. Employers should reassess their negotiation strategy, ensure accurate classification of labor disputes for claims handling, and document the conduct needed to support any statutory exception.

Key Risks for Employers

• Higher Employer Contribution Rates: Benefit eligibility during lockouts may raise experience-rated unemployment tax rates if more claims are approved.

• Misclassification of Work Stoppages: Incorrectly reporting a dispute as a strike instead of a lockout may lead to disputes, audits, or incorrect benefit determinations.

• Untimely or Inaccurate Claim Responses: Failure to respond accurately or timely to unemployment claims can result in unfavorable outcomes and preserve fewer options on appeal.

Source References

• VA SB433 – Unemployment insurance; benefit eligibility conditions, etc.

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