Virginia Payroll Laws: Wages, Deductions, and Final Pay

Virginia payroll laws combine federal wage and hour rules with a state framework built around the Virginia Minimum Wage Act and Virginia Code § 40.1-29. As of January 1, 2026, the state minimum wage is $12.77 per hour and adjusts each year for inflation.¹ Employers have to meet that floor, pay overtime under the Fair Labor Standards Act, follow strict rules on pay timing and deductions, withhold state income tax, and carry unemployment and workers’ compensation coverage where required. The Virginia Department of Labor and Industry enforces the wage rules, and willful violations can be charged as misdemeanors or felonies.

Minimum Wage in Virginia

Every Virginia employer must pay at least $12.77 per hour starting January 1, 2026.¹ The rate was $12.00 through 2024 and $12.41 in 2025. Beginning in 2025, the Commissioner of Labor and Industry adjusts the wage each October for the following January using the CPI-U published by the Bureau of Labor Statistics.² The adjustment cannot go below zero, so the rate can stay flat but will not drop.

Employers who knowingly violate the minimum wage face fines between $10 and $200 per violation, and they owe the affected worker all unpaid wages plus 8 percent annual interest. A court can also award the employee’s attorney fees.³

Tipped Employees

A tipped employee under Virginia law is someone who regularly receives more than $30 per month in tips.⁴ Employers may pay a direct cash wage as low as $2.13 per hour under the federal tip credit, but only if tips bring total hourly earnings to at least $12.77.¹ If tips fall short in a pay period, the employer makes up the difference. The FLSA also requires the employer to inform the worker about the tip credit arrangement before applying it.⁵

Overtime Pay

Non-exempt employees must receive one and a half times their regular rate for every hour worked over 40 in a workweek. Virginia Code § 40.1-29.2 makes any employer who violates the FLSA’s overtime rules liable under Virginia law for the same remedies available federally, so an employee can bring the claim in state court.⁶

The statute of limitations is two years, or three years if the violation was willful.⁷ A successful claim recovers the unpaid wages plus an equal amount in liquidated damages, doubling the total. An employer can shrink or avoid the liquidated portion only by proving the violation was made in good faith with reasonable grounds to believe it was lawful.

Overtime Exemptions

The FLSA’s executive, administrative, and professional exemptions require the employee to earn at least $684 per week ($35,568 per year) on a salary basis and to meet a duties test. Highly compensated employees earning at least $107,432 per year face a lighter duties test.⁸ Virginia follows these federal thresholds. Misclassifying a non-exempt worker as exempt is a common and expensive mistake, because it produces back-wage and liquidated-damage exposure for every affected pay period.

Pay Frequency and Pay Stubs

Virginia Code § 40.1-29 requires hourly employees to be paid at least every two weeks or twice a month, and salaried employees at least once a month.⁹ Employers must set regular pay periods for all employees except executive personnel, and once a schedule is set it needs to stay consistent.

Each payday, every worker gets a written statement, either on paper or through an online portal, showing:

Employer name and address
Hours worked during the pay period (for hourly workers, and for salaried workers earning below the federal salary-level threshold)
Rate of pay
Gross wages for the period
The amount and purpose of every deduction

The statement must include enough detail for the employee to verify how gross and net pay were calculated.¹⁰ If pay stubs are delivered electronically, the federal E-SIGN Act generally requires the employee’s affirmative consent and disclosure of how to withdraw it or request paper.

Deductions From Wages

Virginia allows employers to withhold payroll taxes, income taxes, and other legally required amounts without asking. Every other deduction requires the employee’s written, signed authorization before the money comes out.⁹ Health insurance premiums, retirement contributions, and union dues all need that signed form. Verbal agreement is not enough.

That includes deductions for business losses. Docking a paycheck for a cash register shortage or damaged goods without written authorization is unlawful, and the employee can recover the full amount plus interest. Willful wage withholding with intent to defraud is a Class 1 misdemeanor when the amount is under $10,000, and a Class 6 felony at $10,000 or more.⁹

Virginia Income Tax Withholding

Every employer paying wages in Virginia must withhold state income tax. For wages paid after July 1, 2025, the brackets applied to annualized taxable income are:

2 percent on the first $3,000
3 percent from $3,001 to $5,000
5 percent from $5,001 to $17,000
5.75 percent above $17,000

The standard deduction built into the withholding tables is $8,750 for single filers and $17,500 for joint filers. Those increased amounts are scheduled to sunset after tax year 2026, potentially reverting to $3,000 and $6,000.¹¹

Filing frequency depends on monthly liability. Employers owing less than $100 per month file quarterly. Those owing $100 to $1,000 per month file monthly by the 25th. Employers with monthly liability of $1,000 or more must deposit semi-weekly, within three banking days of the federal cutoff. Everyone files an annual reconciliation (Form VA-6) by January 31 and submits W-2s and 1099s electronically by the same date. Late filing can trigger penalties up to 30 percent of the tax due.¹¹

Unemployment and Workers’ Compensation

Virginia employers pay unemployment insurance tax to the Virginia Employment Commission. Base rates run from 0.1 percent to 6.2 percent based on the employer’s experience rating, which reflects former employees’ benefit draws.¹² New employers receive a standard starting rate until they build enough history for an experience calculation. Federal FUTA runs 6.0 percent on the first $7,000 of each employee’s wages, reduced to an effective 0.6 percent for most employers who pay state unemployment tax on time.

Workers’ compensation coverage is required for any employer who regularly employs more than two people, counting part-time and full-time workers, subcontractor employees performing the same type of work, and executive officers.¹³ A business bringing in subcontractor crews for the same trade can cross the two-employee threshold without noticing. Employers without required coverage face penalties from the Virginia Workers’ Compensation Commission and lose the statutory shield against employee suits over workplace injuries.

New Hire Reporting

Within 20 days of a new employee’s start date, employers must report the hire to the Virginia New Hire Reporting Center, operated under the Division of Child Support Enforcement. The same 20-day deadline applies to newly engaged independent contractors.¹⁴ The reports help locate parents who owe child support and feed fraud-prevention databases for unemployment and public assistance programs.

Payroll Recordkeeping

Federal law requires payroll records and collective bargaining agreements to be kept for at least three years. Supporting documents used to calculate wages, such as time cards, schedules, and records of additions or deductions, must be kept for at least two years.¹⁵ Keeping everything for three years is safer, since that matches the longest statute of limitations for willful wage violations under state and federal law. Department of Labor and Industry investigators can request records during complaint investigations, and documentation gaps generally hurt the employer.

Worker Classification

Treating an employee as an independent contractor to avoid withholding taxes, overtime, and benefits creates exposure on several fronts at once. The federal economic reality test weighs six factors to decide whether the worker is genuinely in business for themselves or economically dependent on the employer: the worker’s opportunity for profit or loss based on managerial decisions, each side’s investment in equipment and facilities, the permanence of the relationship, the employer’s degree of control, whether the work is integral to the business, and whether the worker’s skill and initiative suggest independent business judgment. No single factor controls, and an “independent contractor” label on a contract does not matter if the economic reality points the other way.¹⁶ An employer who misclassifies may owe back wages, unpaid overtime, unpaid employer-side FICA, and penalties. The IRS can also assess the worker’s share of FICA that was never withheld, and unfiled W-2s carry their own penalties.

Final Paychecks

When employment ends in Virginia, whether the worker resigns or is terminated, the employer must pay all earned wages on or before the next regular payday that would have applied if the person were still employed.⁹ Same-day or next-day payment is not required. The regular pay cycle continues, giving the employer time to calculate final hours, commissions, and earned bonuses.

Earned compensation that is part of the employment agreement, such as commissions on completed sales or bonuses already earned, must be included. Virginia has no statute requiring payout of unused vacation or PTO at termination; whether that balance gets paid depends on the employer’s own written policy. A policy that promises a payout can become enforceable as part of the wage agreement.

An employer who willfully withholds final wages faces the same penalties as any other § 40.1-29 violation: a Class 1 misdemeanor when the unpaid amount is under $10,000, and a Class 6 felony at $10,000 or more, or where the employer has a prior conviction.⁹ Former employees can file a wage claim with the Department of Labor and Industry or take the claim directly to court.

1
Virginia Department of Labor and Industry. Virginia Minimum Wage Rate Increasing Effective January 1, 2026
2
Virginia Code Commission. Virginia Code 40.1-28.10 – Minimum Wages
3
Virginia Code Commission. Virginia Code 40.1-28.11 and 40.1-28.12 – Penalties and Employee Remedies
4
Virginia Code Commission. Virginia Code 40.1-28.9 – Definitions; Determining Wage of Tipped Employee
5
U.S. Department of Labor. Fact Sheet 15 – Tipped Employees Under the Fair Labor Standards Act
6
Virginia Code Commission. Virginia Code 40.1-29.2 – Employer Liability
7
Office of the Law Revision Counsel. 29 U.S. Code 255 – Statute of Limitations
8
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemptions
9
Virginia Code Commission. Virginia Code 40.1-29 – Time and Medium of Payment; Withholding Wages; Written Statement of Earnings
10
Virginia Code Commission. Virginia Code 40.1-29 – Article 2, Pay; Assignment of Wages
11
Virginia Tax. Withholding Tax
12
Virginia Employment Commission. How Are Tax Rates Assigned?
13
Virginia Workers’ Compensation Commission. Employer FAQs
14
Virginia Code Commission. Virginia Code 63.2-1946 – Virginia New Hire Reporting Center; State Directory
15
U.S. Department of Labor. Fact Sheet 21 – Recordkeeping Requirements Under the Fair Labor Standards Act
16
U.S. Department of Labor. Fact Sheet 13 – Employee or Independent Contractor Classification Under the Fair Labor Standards Act