Virginia HB 238 Expands Wage and Hour Liability

On April 22, 2026, Virginia enacted House Bill 238 (HB 238), significantly expanding employer liability for wage-and-hour violations by extending the Virginia Wage Payment Act’s enforcement framework to minimum wage, overtime, worker misclassification, and prevailing wage claims. Under the law, employers may be liable for unpaid wages, liquidated damages equal to the amount of unpaid wages, attorney’s fees and costs, and treble damages for knowing violations. The law also broadens the definition of wages and expands state enforcement authority.

This law applies to Virginia employers subject to the state’s wage-payment, minimum wage, overtime, worker misclassification, and prevailing wage requirements, and took effect on July 1, 2026.

What Employers Should Do

Legal Requirements

• Retain employee paystubs or online payroll records for at least three years following the date the work was performed.
• Ensure compliance with Virginia wage-payment, minimum wage, overtime, prevailing wage, and worker-classification requirements, which may now trigger expanded remedies for violations.

Practical Considerations

• Conduct worker-classification audits to evaluate whether individuals currently treated as independent contractors satisfy applicable Internal Revenue Service (IRS) standards.
• Review commission, bonus, day-rate, and other compensation programs because more forms of compensation may now fall within the expanded definition of wages.
• Evaluate wage-payment, overtime, and payroll administration practices to reduce exposure to liquidated and treble damages.
• Construction employers should review subcontractor oversight processes, contract language, and indemnification provisions in light of the revised contractor liability provisions.
• Consider whether a Professional Employer Organization (PEO) or Administrative Services Organization (ASO) could assist with payroll compliance administration, recordkeeping, workforce classification reviews, and implementation of wage-and-hour compliance controls.

Overview

Expanded Wage-and-Hour Remedies: HB 238 creates a more unified enforcement framework by extending the Virginia Wage Payment Act’s remedies. Available remedies may include unpaid wages, liquidated damages equal to unpaid wages, prejudgment interest, reasonable attorney’s fees and costs, and treble damages for knowing violations.

Expanded Definition of Wages: The law broadens the statutory definition of wages. According to the enacted legislation, covered compensation may include:

• Hourly wages.
• Salaries.
• Overtime wages.
• Piece-rate wages.
• Day-rate compensation.
• Prevailing wages.
• Commissions.
• Bonuses.
• Tips.
• Certain damages related to worker misclassification claims.

This expansion may allow a wider range of compensation disputes to proceed under the Virginia Wage Payment Act’s enhanced enforcement framework.

Increased Worker Misclassification Exposure: Employers found to have improperly classified workers may face claims for back wages, liquidated damages, attorney’s fees, collective actions, and potentially treble damages for knowing violations. Virginia continues to apply a presumption that workers are employees unless independent contractor status can be established under applicable IRS standards.

Expanded Enforcement Authority: The law grants the Virginia Department of Labor and Industry (VDOLI) and the Virginia Attorney General broader investigative and enforcement powers.

• The Commissioner of Labor and Industry may investigate employee and third-party complaints, initiate investigations independently, obtain sworn statements, examine witnesses under oath, issue subpoenas, and refer matters to the Attorney General.
• The Attorney General may investigate violations, bring civil actions, seek restitution and unpaid wages, pursue liquidated damages and injunctive relief, and recover attorney’s fees and costs.

Collective Actions Authorized: HB 238 expressly authorizes employees to bring collective actions on behalf of similarly situated employees using a framework consistent with the Fair Labor Standards Act (FLSA). This may increase the likelihood of multi-employee wage-and-hour litigation.

Construction Industry Changes: The law revises construction-industry liability provisions. General contractors may be treated as employers of subcontractor employees for certain wage-payment purposes. In addition, prior statutory language that permitted reliance on subcontractor certifications was removed. Liability may depend, in part, on whether a contractor knew or should have known of violations under standards developed by VDOLI.

Good-Faith Cure Provision: Beginning July 1, 2026, an employer may avoid certain additional damages and penalties if it demonstrates good faith, had reasonable grounds for believing it complied with the law, and cures the violation within 14 days after notice by paying all unlawfully withheld wages.

Why This Matters

HB 238 significantly increases employer exposure for wage-and-hour violations in Virginia.

The law is particularly important for employers that use independent contractors, pay commissions or bonuses, perform public works work, or rely on subcontractors, as these areas may face increased scrutiny under the new enforcement framework.

Key Risks for Employers

• Liability for unpaid wages plus liquidated damages equal to the unpaid amount.
• Treble damages and attorney’s fees for knowing violations. HB 238 defines “knowingly” to include actual knowledge, deliberate ignorance, and reckless disregard.
• Increased litigation risk arising from collective actions and attorney-fee recovery provisions.
• Expanded exposure arising from worker misclassification claims, including back wages, liquidated damages, attorney’s fees, and potential treble damages.
• Greater enforcement activity from VDOLI and the Virginia Attorney General, including investigations, subpoenas, sworn testimony, and civil litigation.

Source References

• Virginia HB 238 – Minimum wage and overtime wages; payment, of wages, misclassification of workers, civil actions

This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.