• The U.S. Department of Justice (DOJ) has announced a $21.5 million settlement with Deloitte LLP and four affiliated entities (collectively, Deloitte), marking the second False Claims Act (FCA) settlement under the Civil Rights Fraud Initiative launched in May 2025.

• The settlement resolves allegations that Deloitte violated the FCA by falsely certifying compliance with anti-discrimination requirements in its federal contracts while engaging in challenged race- and sex-based employment practices and charging costs relating to these practices to federal government contracts.

• This case follows the $17 million IBM settlement announced in April 2026 and confirms that DOJ’s enforcement in this area remains active.

The discriminatory practices alleged were as follows:

• “Taking race or sex into account when making hiring, promotion, and staffing decisions to achieve progress towards non-public race and sex-based workforce composition goals for business units.”

• Evaluating senior personnel “in part, based on their contributions to helping Deloitte achieve its workforce composition goals,” including a “two-year period” during which certain senior employees’ compensation could be impacted based on whether demographic goals were met.

• “Offering certain training, mentoring and leadership development programs, educational opportunities or resources … on the basis of race or sex.”

NLRB GENERAL COUNSEL RELEASES ROADMAP FOR OVERTURNING LABOR PRECEDENTS

• National Labor Relations (NLRB or Board) General Counsel, Crystal Carey, has issued Memorandum GC 26-04, providing the clearest signal yet of the substantive changes she intends to pursue with the Board. She identified more than a dozen Biden-era precedents that her office has either asked the Board to reconsider or that she intends to challenge when an appropriate case arises. This memo is a significant development and offers a concrete preview of Carey’s plan to return to sounder labor policy.

• Captive Audience Meetings. Carey is advocating to reverse Amazon.com Services LLC, 373 NLRB No. 136 (2024), which broke with more than 75 years of precedent by holding that it violated the National Labor Relations Act (NLRA or Act) to hold mandatory meetings where employers express their views on unionization. Carey has filed a motion encouraging the Board to restore the longstanding Babcock & Wilcox standard which, since 1948, had permitted employers to require employee attendance at such meetings during paid work time. If the Board reverses Amazon, employers will once again have a critical tool for communicating directly with their workforce during organizing campaigns.

• Work Rules Under Stericycle. Carey is advocating to overturn Stericycle, Inc., 372 NLRB No. 113 (2023), which adopted a standard under which facially neutral workplace rules could be found presumptively unlawful if they had a “reasonable tendency” to chill employees from exercising NLRA rights. In practice, Stericycle called into question routine handbook policies—civility rules, attendance rules, confidentiality provisions, social media policies—and applied an analysis with unpredictable and inconsistent outcomes. Carey’s position signals a return to a more employer-friendly framework that focuses on whether rules explicitly restrict protected activity, rather than speculating about potential chilling effects. (Separately, Carey has instructed regional directors to de-prioritize charges that are based purely on generalized alleged violations of Stericycle, and to focus on more clear-cut violations where an adverse action actually occurred.)

• Cemex Bargaining Orders. Carey has announced her intent to challenge Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 (2023), which fundamentally altered the union recognition process. Under Cemex, if an employer commits an unfair labor practice that arguably might affect the results of the election, the Board can impose a bargaining order, even before an election actually occurs. Carey described Cemex as “contrary to Supreme Court precedent and sound labor policy” and intends to press for a return to the traditional Gissel/Linden Lumber framework, which afforded greater procedural protections and preserved employees’ right to vote.

• Severance Agreements and Employer Speech. Carey has also taken aim at McLaren Macomb, 372 NLRB No. 58 (2023), which restricted employers’ ability to include standard non-disparagement and confidentiality provisions in severance agreements, and Siren Retail Corp. d/b/a Starbucks, 373 NLRB No. 135 (2024), which narrowed the permissible scope of employer predictions about the effects of unionization. Carey is advocating to return to the established standard in Tri-Cast, Inc., which gave employers broader latitude to communicate their views about potential impacts of union representation without running afoul of the Act.

What Does This Mean for Employers?

• Now that the Board has a 3-1 Republican majority, change is certainly on the horizon. From a business standpoint, it is worth analyzing how these anticipated changes may affect operations and employee relations. That said, the cases that General Counsel Carey has called out in the memo remain in effect, despite her advocacy. There is no guarantee that the Board will agree with Carey’s interpretations of the law. There is also no guarantee that the Board, even if it reverses a certain Biden-era decision, will revert back to the prior standard.

• Employers should follow these developments closely and make strategic decisions about handling live or pending issues that involve the caselaw that Carey has targeted. Employers with pending NLRB charges or active organizing campaigns, in particular, should evaluate whether any of these anticipated shifts present opportunities to preserve favorable arguments on the record.

• While the General Counsel’s direction is clear, the pace of change will be case-by-case—and employers who position themselves strategically now will be best prepared to benefit as the law evolves.

If you are not a retainer client, contact us to learn about our services by calling 423-764-4127 or click here.

SESCO FEATURED PRODUCT 

DISC AND PRE-EMPLOYMENT TESTING

DiSC is the leading personality assessment tool. It promotes increased communication skills for individuals, teams, and leaders. DiSC dimensions of behavior (Dominance, Influence, Steadiness, and Conscientiousness).

Employers may contact us if they have questions or to have us assist with DiSC or other pre-employment testing.

Please call (423)-764-4127 for more information.

• The U.S. Department of Labor (DOL) has issued guidance addressing when employers must include nondiscretionary bonuses in a non-exempt employee’s regular rate of pay under the Fair Labor Standards Act (FLSA). The guidance is important for employers that offer bonus programs tied to employee earnings because, if properly structured, certain percentage-based bonuses may avoid later overtime recalculations.

• Must Bonuses Generally Be Included When Calculating an Employee’s Regular Rate? A discretionary bonus generally does not have to be included when calculating an employee’s regular rate of pay. A bonus is discretionary only if both the amount of the bonus and whether to pay the bonus at all are determined in the employer’s sole discretion, and the employee was not promised the bonus in advance. By contrast, a nondiscretionary bonus must be included when calculating an employee’s regular rate. Once the amount of a nondiscretionary bonus is determined, the employer generally must allocate the bonus back over the weeks in which it was earned, recalculate the employee’s regular rate for those weeks, and pay any additional overtime due as soon as practicable based on the increased regular rate.

• What Does the DOL Guidance Say? According to the DOL, when a bonus is properly structured as a percentage of total earnings, including overtime compensation, employers generally do not need to go back and recalculate the employee’s regular rate and overtime pay after the bonus is paid. In that circumstance, the bonus already proportionally accounts for overtime compensation. The Opinion Letter does not mean that all bonus programs are exempt from overtime recalculations. The DOL emphasized that the bonus must be based on the employee’s total earnings, including overtime compensation, to qualify for the exclusion. The formula cannot reduce or dilute overtime compensation, and employers cannot structure bonus plans to avoid overtime obligations. In addition, amounts excluded from the regular rate—such as certain discretionary bonuses, gifts, expense reimbursements, or benefit-plan contributions—generally should not be included in the earnings used to calculate the bonus.

DOL Clarifies When Meal Breaks May Be Unpaid

• The DOL has also issued guidance addressing when employers may treat meal breaks as unpaid under the FLSA. The FLSA does not require employers to provide meal breaks. However, if an employer provides a meal break and treats that time as unpaid, the break must qualify as a bona fide meal period.

• When Must a Meal Break Be Paid? The central issue in most meal-break cases is whether employees are required to work during the break or are actually relieved from duty. The break must be spent predominantly for the employee’s benefit, rather than the employer’s. If the employer receives the predominant benefit of the break time, the time must be paid. Whether a particular break satisfies that standard is a highly fact-sensitive inquiry. Thirty minutes is typically sufficient for a bona fide meal period. Employees must be relieved from work duties, but employers are not required to allow employees to leave the premises for the break to remain unpaid.

• What Does the DOL Guidance Say? Opinion Letter FLSA2026-7 involved an employee working at a large, secured facility with controlled access points and parking located a significant distance from work areas. The employee claimed that, because of the time required to walk from the work area through security and to the parking lot, some employees had only 10-15 minutes remaining in their 30-minute meal break, creating a “coercive dynamic” that discouraged employees from taking breaks off-site. The DOL concluded that the employer provided a bona fide meal period because the employee was relieved from work duties during the 30-minute break and could use that time to eat or engage in personal activities on-site. The DOL also explained that an employer need not exclude time voluntarily spent traveling off-site to obtain or eat a meal from the allotted break period and may require employees to take meal breaks on the employer’s premises.

• Employers should nevertheless remain mindful that state and local wage and hour laws may impose more protective meal-break requirements than federal law.

VETS-4212 Filing Reminder for Federal Contractors: Sept. 30 Deadline Nears

• The annual VETS-4212 filing season is underway. The Department of Labor’s Veterans’ Employment and Training Service (VETS) began accepting reports on Aug. 1, 2026, and covered federal contractors and subcontractors must submit their reports by Sept. 30, 2026.

• VETS-4212 Reporting at a Glance. Under the Vietnam Era Veterans’ Readjustment Assistance Act, covered federal contractors and subcontractors must report annually on their employment of protected veterans. Form VETS-4212 captures data on the number of protected veterans in a contractor’s workforce and among its new hires.

• Who Must File? Generally, the reporting requirement applies to federal contractors and subcontractors that have received a covered federal contract or subcontract valued at $200,000 or more, regardless of employee count. The Federal Acquisition Regulation reporting threshold increased from $150,000 to $200,000 effective Oct. 1, 2025, following an inflation adjustment to acquisition-related thresholds, according to VETS guidance.

• Covered contractors and subcontractors may file their reports electronically through the Department of Labor’s VETS-4212 Reporting Application, which is the agency’s preferred submission method. Importantly, the DOL does not accept requests for filing extensions.

If you are not a retainer client, contact us to learn about our services by calling 423-764-4127 or click here.

SESCO FEATURED PRODUCT 

WAGE SURVEYS

Using comprehensive local, regional, and national salary survey data, coupled with direct contact with many of the organizations with which you are in competition for staff, we would attain a comprehensive profile of the current wages and salaries being paid for comparable positions in your area. This information will give you a current, contemporary feel for what is transpiring in the marketplace. Please call (423)-764-4127 for more information.

• The U.S. Court of Appeals for the Seventh Circuit (covering Illinois, Indiana, and Wisconsin) has issued a wage and hour decision affirming a dismissal for an employer in a class action arising out of its alleged failure to pay overtime in violation of the Fair Labor Standards Act (FLSA).

• In Nichole Lutz v. Froedtert Health Inc., Lutz filed suit alleging that her employer violated the FLSA on two grounds. First, she argued that Froedtert Health failed to properly include shift differentials, premiums, and other types of nondiscretionary pay when calculating employees’ regular rate of pay in determining overtime compensation owed. Second, Lutz claimed that Froedtert Health wrongfully excluded holiday pay from the regular rate calculation.

• The Calculation of Overtime Compensation. The FLSA requires that employees receive overtime pay for any hours worked beyond 40 hours in a workweek that is 1.5 times their “regular rate.”  Froedtert Health calculated its employees’ regular rate by dividing each employee’s total weekly remuneration—including shift differentials and certain bonuses and premiums—by the total number of hours worked during that week (including overtime hours). It then multiplied the total number of overtime hours worked by 0.5 times the regular rate to determine the overtime premium amount owed to employees, which Froedtert Health paid in addition to any remuneration that employees earned during those hours. Lutz challenged this approach, arguing on appeal that employers should segregate non-overtime hours from overtime hours and separately calculate an employee’s total overtime pay by multiplying the number of overtime hours worked by 1.5 times the regular rate, regardless of the remuneration the employee would have earned during those hours absent the overtime designation.  The Seventh Circuit rejected Lutz’s argument and held that Froedtert Health’s methodology complied with the FLSA. According to the court, the appropriate approach for calculating the “regular rate of pay” is to use all remuneration earned by the employee during the workweek (minus statutory exclusions) and then use that rate to calculate the amount of overtime premium pay owed to the employee—not the employee’s total overtime pay. The court emphasized that this “aggregate” methodology is most consistent with the text of the FLSA, U.S. DOL regulations, and cases from other courts.

• Exclusion of Holiday Premiums from the Regular Rate of Pay. The court further held that Froedtert Health properly excluded holiday premium pay when calculating its employees’ regular rate. Under the FLSA, “extra compensation provided by a premium rate” for holidays may be excluded from the regular rate calculation if the total premium rate is at least 1.5 times the “bona fide rate” for similar work performed during the regular workweek on other days. The court held that Froedtert Health properly excluded the holiday premiums from its calculation of the regular rate because the total pay rate for holidays was greater than 1.5 times the employees’ bona fide rates.

Background Check Authorizations and Process

• For employers that use third-party background checks, the legal risk often lies less in the substance of the report and more in the process employed to obtain and use it. The Fair Credit Reporting Act (FCRA) requires an employer to take specific steps before it may procure a consumer report for employment purposes and before it may take adverse action based on that report.

• FCRA Disclosure, Authorization, and Timing Requirements for Employment Background Checks. On the front end, the FCRA requires a “clear and conspicuous” written disclosure, in a stand-alone document, that a consumer report may be obtained for employment purposes. The FCRA also demands that the applicant or employee provide written authorization for such report. The disclosure and authorization should not be buried in the employment application. Lean, vetted forms are usually the safest course. Required disclosures should be provided, and authorizations obtained, before ordering a background check.

• Pre-Adverse and Adverse Action Process Under the FCRA. The adverse action process poses further risk. If information in a background report may lead to an adverse decision—such as rescinding a conditional offer or declining to hire—the employer usually cannot move straight to the final decision. Generally, it must first provide the applicant or employee with a pre-adverse action notice, along with a copy of the report and a summary of FCRA rights. That step gives the applicant or employee a chance to review the report, flag possible inaccuracies, and provide context. Only after the employer has waited for the requisite amount of time and considered any applicant or employee response should it make a final decision. If the employer ultimately decides to take adverse action, it also generally must provide an adverse action notice to the applicant or employee.

Treasury Issues Guidance on Employer Tax Credit for Paid Family and Medical Leave

• The U.S. Treasury Department (“Treasury”) and the Internal Revenue Service (IRS) have released Notice 2026-28 (the “Notice”), which provides guidance on the employer tax credit for paid family and medical leave under the One Big Beautiful Bill Act (OBBBA). Public comments are due by October 16.

• There are two ways an employer may calculate the tax credit: (i) the traditional “wage method,” which is a percentage of actual wages not in excess of the threshold that are paid during an employee’s family and medical leave or (ii) the “premium method,” which is a percentage of the premiums paid for family and medical leave insurance coverage. The Notice focuses primarily on implementation of the new “premium method,” under which an eligible employer that maintains a paid family and medical leave insurance policy may elect to calculate the credit by reference to premiums paid or incurred for that policy rather than wages actually paid to employees during qualifying leave.

• The Notice’s central substantive approach is to make the premium method dependent on the existing wage method: a premium is creditable only to the extent it funds a benefit for which a credit would have been available under the wage method if the benefit had been paid directly.

• Taxpayers may rely on the Notice for taxable years beginning after December 31, 2025, and before proposed regulations are issued.

If you are not a retainer client, contact us to learn about our services by calling 423-764-4127 or click here.

• As hybrid and remote work arrangements become more permanent fixtures in the workplace, the flexibility offered through this work brings more complex scenarios as to what the law considers to be compensable “work time.” The U.S. Department of Labor (“DOL”) has issued two opinion letters clarifying the compensability of travel time for remote and field work under the Fair Labor Standards Act (“FLSA”). These opinion letters, while only considering specific fact patterns, provide at least some practical guidance that employers can follow to avoid costly wage-and-hour disputes.

• In the first letter, FLSA2026-9, the DOL contemplated whether an employee’s time voluntarily commuting into the office mid-day is considered “work time.” In this scenario, the employee works both at home and in-office, and the employer offers an alternative mid-day commute to cut down on traffic time. The letter addresses three different fact patterns: (1) the employee changes the commute time to avoid rush hour traffic, working at home in the morning prior to coming into the office, and then working again in the late afternoon after leaving; (2) the employee volunteers to work additional hours but only if the employee can do that work prior to driving into the office instead of arriving early or staying late; and (3) the employee uses the city bus to commute and requests permission to bring work home to complete.  The DOL concluded that in each of these three scenarios, the travel between the employee’s home and office is considered an ordinary commute and is not considered hours worked under the FLSA. Remember that if the employee engages in any work while traveling, that time must be paid. In addition, this letter only addresses mid-day travel when the office is the employee’s regular place of work. If, however, the travel is to a special temporary assignment or is a principal activity of the employee’s job (i.e., travel between client worksites), this analysis may differ.

• The second letter issued by the DOL, FLSA2026-10, concerns a field service engineer with no primary office who spends time receiving pages and making phone calls to clients and other engineers to schedule appointments prior to or while driving from their home to their first client appointment in an employer-provided vehicle. The DOL concluded that time spent receiving pages is not compensable because that work is incidental to the employee’s use of an employer-provided vehicle for commuting. Time spent calling clients and scheduling appointments, however, is compensable hours worked because those calls are integral and indispensable to the employee’s principal duties. Less clear is the drive time from the employee’s house to the first client appointment. Whether that commute is compensable hours worked depends upon when the employee’s workday starts. Because client calls are a principal activity, as soon as the employee makes one call, the workday begins. Therefore, if the employee makes calls and then drives to the first client worksite, all of that travel time is compensable, even if it happens before 8:00 a.m. If instead the employee leaves home first and then makes calls during the drive, that drive time is unpaid as ordinary commuting until the first call is made. Essentially, the DOL concluded that the workday begins when the first compensable call begins, so any travel time after the beginning of that first phone call is compensable hours worked.

  Senate Confirms Macy and Prouty to NLRB

• The U.S. Senate has confirmed James Macy and David Prouty to the National Labor Relations Board (NLRB).

• Macy, a Republican, will give the Board a 3-1 Republican majority once sworn in. Prouty, a Democrat and current Board member, was confirmed for a second term.

• The confirmations also ensure the NLRB will maintain a working quorum when Prouty’s current term expires later this month and allow the Republican majority to change Biden-era decisions if they so choose.

If you are not a retainer client, contact us to learn about our services by calling 423-764-4127 or click here.

CHANGES TO SEALING STANDARDS

Under the Clean Slate law, which is effective July 1, 2026, records for certain types of offenses will be automatically sealed. Records eligible for automatic sealing include:

• Misdemeanor non-convictions and felony non-convictions (i.e., charges resolved in favor of the defendant, except those that result in deferred dismissal).
• Misdemeanor convictions, such as petit larceny, shoplifting, trespassing, distribution of marijuana, and disorderly conduct.
• Convictions for the possession of marijuana.
• Traffic infractions.

The law also provides that records for offenses not subject to automatic seal may be petitioned for seal.

PROHIBITED PRACTICES

The Clean Slate law generally prohibits employers from requiring an applicant to disclose information concerning any arrest, charge, or conviction that has been sealed, unless a statutory exemption applies. These exemptions include:

• Applicants for employment or volunteer positions with the Virginia State Police or local police departments or sheriff’s offices.
• Positions for which Virginia law requires employers to inquire into sealed records.
• Positions for which federal law requires such inquiries.
• Positions or facilities subject to US national security requirements under federal law, contracts, or executive orders.
• Positions for which Virginia regulations expressly authorize employers to access sealed records.

GUIDANCE FOR EMPLOYERS

Employers hiring in Virginia should update pre-hire questionnaires that inquire about prior arrests, charges, or convictions to instruct Virginia applicants not to disclose information regarding any criminal record that has been sealed. We have prepared an updated Application for Employment that employers can order.

If employers have any questions or concerns, we recommend they contact us to ensure compliance. For assistance, contact us at 423-764-4127 or by email at sesco@sescomgt.com

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What the FLCA Would Change

The National Labor Relations Act (NLRA) currently imposes no timeline for reaching a first contract, allowing employers to negotiate for months, or even years, to hammer out a fair deal.

The FLCA would amend the NLRA to impose a compressed, federally mandated timeline on first-contract negotiations in the private sector. Under this framework, following union certification:

• Day 10: The employer is required to begin bargaining.
• Day 100: Federal mediation is triggered if no agreement has been reached.
• Day 130: Binding interest arbitration is initiated if mediation fails.
• Day 144: An arbitration panel is seated to impose a final contract.

This represents a maximum bargaining period of 120 days – 90 days of bargaining followed by 30 days of mediation – before either party can invoke mandatory arbitration. If the parties cannot agree on a neutral third arbitrator, the Federal Mediation and Conciliation Service would step in to designate one. The arbitration panel’s decision would be binding for two years.

The FLCA also strips employers of the traditional negotiating dynamic in which employees ultimately vote on whether to ratify a contract. Under binding arbitration, the terms are imposed without a ratification vote.

What Should You Do Now?

1. Contact your U.S. Senators. The most effective action you can take right now is to make your voice heard. Reach out to your U.S. Senators to express your concerns

2. Assess your union exposure. Take stock of which of your facilities or workforces could be subject to an organizing campaign. If a union were certified tomorrow, would you be prepared to bargain effectively within a 90-day window?

3. Evaluate your bargaining readiness. Understand where your compensation and benefits stand relative to the market. If arbitration became a possibility, an arbitrator would evaluate your financials and employee living costs. You’ll want to enter that process in a strong position, not scrambling to gather data.

4. Audit your first contract bargaining strategy. If you already have unions in some locations, understand how this proposed law would change your approach to any upcoming initial agreements.

SESCO has a long history of assisting employers with a variety of labor services and union awareness training. Please contact us as 423-764-4127 or sesco@sescomgt.com with questions or to request assistance. 

As SESCO has been reporting over the last several months, Virginia’s legislators and Governor have passed and signed into law the following sweeping employment regulations that affect all public and private employers. Please consider the following summaries of each regulation as well as SESCO staff recommendations to ensure compliance.

Expanded Definition of “Wages”

Virginia Statute HB238

This new law redefines “wages” and will become effective July 1, 2026.

Under the new definition, wages includes any renumeration an employer owes to an employee, including hourly wages, minimum wages, piece rate wages, day rates, salaries, overtime wages, legally required prevailing wages, commissions, tips and bonuses.

The most important requirement is that in Virginia, once a commission is earned, it must be paid regardless of policies such as claw backs, employment standing, employed when the commission is paid, etc.

SESCO Staff Recommendations

Pay plans and practices need to be audited for wage and hour compliance, both federal DOL as well as Virginia wage laws. Pay plans, especially within retail organizations that pay commissions and bonuses such as automotive dealerships and organizations that pay tips such as restaurants, need to ensure that their individual pay plans are reduced to writing and signed and dated.

Ensure that overtime is calculated on all non-discretionary bonuses, commissions and incentives. You can contact SESCO to ensure compliance, but this issue is the number one FLSA wage-hour compliance matter for all employers across the United States. Commissions, bonuses and incentives are wages earned for the purposes of overtime and please know that payroll providers do not ensure compliance with this requirement.

As SESCO is considered a national expert on wage and hour compliance, both federal and state, have your consultant conduct an onsite or virtual audit of all compensation practices. Retainer clients (monthly service agreement) receive these audits at no additional charge.

Wage Transparency (Job Postings)

Virginia Statue SB215

As of July 1, 2026, employers are required to disclose wage and salary ranges in all public and internal postings for each job opening, promotion, transfer with the employer.

The “wage or salary range” means the minimum and maximum wage or salary for the position as set forth in good faith by a reference to a current and applicable pay scale, any previously determined wage or salary range for the position, the actual range or wages and salaries for persons currently holding equivalent positions or the budgeted amount available for the position as current and applicable.

Any analysis of whether the wage or salary range has been set in good faith shall consider, among other items, the breadth and process of the wage or salary range analysis.

As to enforcement, applicants or employees must first notify the employer of any question or concern as to wage transparency and, further, allow a fifteen (15) business day cure on behalf of the employer before filing a lawsuit.

SESCO Staff Recommendations

Consider the following SESCO Staff Recommendations to ensure compliance:

• All employers, regardless of public or private, large or small, industry or purpose, should develop a formal compensation administration plan as labor is any employer’s largest-single controllable cost. Proactive employers will fill the void of developing, implementing and communicating sound compensation philosophies and practices. For those employers that do so, you will comply with this regulation very easily.

• The application of this wage transparency is if a position is externally or internally posted. Is the employer “advertising” for applicants or employees to apply for an open position? If so, the posting must include as noted above the current and credible wage/salary scale.

Distribution of general employment applications, receipt of unsolicited resumes or applications or websites where applicants can apply for work, and where no position is currently being advertised or promoted, would not be affected by the new law. Many employers actively seek applications and/or resumes to keep the “hopper” full in case of future turnover.

• Employers need to adopt or revise job postings as well as promotions and transfers policies.

• Employers should assess the marketplace every two (2) years through a custom wage and benefits survey. This would include the employer selecting specific organizations to participate in a confidential wage and benefits survey conducted by an outside third party such as SESCO. This will go a long way to ensure the credibility of the posted wage and salary range as well as to undergird the organization’s compensation philosophy and practices.

Ban on Requesting or Discussing an Applicant’s Pay History

Virginia Statute SB215

Effective July 1, 2026, employers are prohibited from seeking or relying on a perspective employee’s wage or salary history when making hiring or compensation decisions. Of course, if an employer has a defined compensation system to include new hire rates and ranges, this ban is easily complied with.

If a prospective employee voluntarily provides wage or salary history to an employer without the employer’s prompting the request, then:

• The employer may not rely on such wage or salary history to support a wage or salary higher than the employer’s initial offer of compensation.

• The employer may not seek to confirm the wage or salary history of the prospective employee such as through reference checks to support a wage or salary higher than the wage or salary offered by the employer.

SESCO Staff Recommendations

Please consider the following SESCO staff recommendations to ensure compliance:

• Conduct an audit of all screening and hiring practices to include interviewing questions, forms and processes to ensure compliance. This would include an immediate review of your application form, to remove any questions that refer to previous positions and subsequent wage and salary history.

SESCO has revised its current application form to comply with this new ban. This application form can be purchased by clicking here and/or by calling Tonya Roark at 423-764-4127.

• Train all those who conduct interviews so that inappropriate questions to include this ban are not asked.

• Where appropriate, such as on websites or other screening and hiring documents, include a disclaimer, in effect, summarizing the ban and the employer’s compliance thereto.

Restrictions on Non-Compete Agreements

Virginia current prohibits employers from entering into or enforcing a post-employment “covenant not to compete” those earning less than $1,507.01 per week or any other nonexempt employee under the FLSA (irrespective of their total earnings) cannot be required to enter into a post-employment non-compete agreement.

Virginia Statute SB128 and SB170

As of July 1, 2026, new restrictions apply to non-compete agreements entered into, amended or renewed on or after these restrictions include:

• Any “healthcare professional” can’t be required to enter into a non-compete agreement. “Healthcare professionals” are defined as “any person licensed, registered, or certified by the Board of Medicine, Board of Nursing, Board of Optometry, Board of Psychology, or Board of Social Work.

• No covenant not to compete between an employer and employee is enforceable if such employer discharges an employee from employment without providing severance benefits or other monetary payment to such an employee, unless the employer discharges an employee for cause. Such severance benefits or other monetary payment shall be disclosed upon execution of the non-compete agreement.

SESCO Staff Recommendations

Please consider the following for compliance:

• Have SESCO audit current non-competes for compliance or have SESCO revise and/or prepare new non-competes to ensure compliance. This new statute does not affect a non-disclosure/confidentiality or non-solicitation agreement which SESCO prepares and widely recommends for various organizations and positions.

• Severance Agreements and Releases will need to be revised to comply with this new regulation. SESCO prepares and initiates compliant Severance Agreement and Releases for our clients.

Minimum Wage

Virginia Statute SB1

The current Virginia State hourly minimum wage is $12.77 per hour which was effective January 1, 2026.

The minimum wage will increase to $13.75 per hour on January 1, 2027. On January 1, 2028, it will increase again to $15.00 per hour.

Effective January 1, 2029, and annually thereafter, the minimum wage rate will be adjusted to reflect increases in the Consumer Price Index (CPI).

SESCO Staff Recommendations

Please consider the following recommendations to ensure compliance:

• Ensure all state labor law postings are compliant. SESCO provides federal and state labor law posting kits for $29.95. You can click here to order or call Tonya Roark at 423-764-4127 to order these postings and/or other SESCO forms.

Paid Sick and Safe Leave

Virginia Statute SB199

Employers, both private and public, are required to provide paid sick and safe leave to their employees.

• Effective July 1, 2027, employers with 50 or more employees must comply.

• Effective January 1, 2028, employers with 25 or more employees must comply.

• Effective January 1, 2029, employers with at least one (1) employee must comply.

The new regulations require that one (1) hour of paid sick leave for every 30 hours worked are provided to employees of private, state and local governments and employers. This law currently applies to home health workers as defined.

This new regulation does not apply to licensed healthcare employees that work less than 30 hours per week. This includes employees licensed by the following regulatory boards: counseling, dentistry, funeral directors and embalmers, LTC, medicine and nursing, nor does it apply to employees who work for employers who are licensed by the Department of Health if the employee works less than 30 hours per week.

Employees may use accrued paid sick leave for:

• Leave related to their own personal or mental illness, injury or health condition, as well as for preventative healthcare.

• Leave to take care of a sick family member (as defined).

• Leave related to domestic abuse, sexual assault or stalking.

• Employers are not required to pay out accrued unused sick and safe leave at separation for any reason of separation of employment to include termination for cause or voluntary resignation.

Employers with a current paid leave policy such as paid time off, vacation and/or sick leave, that provides an employee with an amount of paid leave sufficient to meet the requirements of the new paid sick and safe leave requirements under the same conditions as defined are not required to provide additional paid leave time.

SESCO Staff Recommendations

Consider the following SESCO staff recommendations to ensure compliance:

• All employers should have their current handbook and related policies reviewed for compliance. SESCO retainer clients (monthly service agreement) receive these reviews at no charge. These reviews are conducted by SESCO staff attorneys.

• Know that the definition of “family member” is very broad and needs to be understood for policy application specific to these leave requirements.

• Employers will need to customize policy based on whether exemptions as noted within the law and whether the employer wants to carve out coverage for specific staff positions.

• The law does require carryover provisions, so current policy that does not allow for carryover must be revised to ensure compliance with the specific carryover provisions.

• Policy needs to include employee notification standards such as a “two (2) week notice” when possible.

• Once policy is updated, employers need to review new policy revisions to all leadership and employees for a full understanding of their rights as well as responsibilities.

Paid Family and Medical Leave Insurance Program

Virginia Statute SB2

Virginia has established a new state-administered Paid Family and Medical Leave (PFML) insurance program that applies to all employers except the “Commonwealth.” Through this program, employees will receive payment from the state (Virginia Employment Commission) not by their employer. This state-administered paid family and medical leave program will be funded by payroll premiums shared by both employers and employees. Employers may deduct up to 50% of the required contributions from employees’ pay.

Employers with more than 10 employees will be required to deduct up to 50% of the required contribution. Employers with 10 or fewer employees will be required to deduct 50% of the required contribution from employee wages and will not be required to make additional employer contributions. Any deduction may not reduce an employee’s compensation below minimum wage.

• The terms under which employees may use benefits.

• The amount of benefits available.

• The procedure for filing a claim for benefits.

• A statement of the right to job protection and benefits continuation.

• A statement that discrimination and retaliatory personnel actions are prohibited.

• A statement that the employee has a right to file a complaint for violation of the statute.

• As of December 1, 2028, employees may start receiving benefits as covered.

Up to 12 weeks of paid leave in a benefit year (as defined) can be used for the following reasons:

• To care for a new child during the first year after birth, adoption or placement through foster care.

• To care for a family member with a serious health condition (as defined).

• For an individual’s own serious health condition (as defined) that makes the individual unable to perform the functions of their position of employment.

• To care for a covered military service member who is the covered individual’s next of kin or other family members.

• Qualifying leave arising out of a family member of the covered individual on military active duty, or an impending call or order to military active duty in the armed forces.

Up to four (4) weeks of paid leave in a benefit year (as defined) to be used or to seek safety services for a covered individual or family member related to domestic violence, sexual assault or stalking.

Additional details that apply include:

• Paid leave benefits equal to 80% of the average weekly wage earnings, subject to a cap of 100% of the statewide average weekly wage of which the VEC will adjust by September 30 of each year to apply beginning on January 1 of the following calendar year.

• Employees may take continuous, intermittent or reduced schedule leave, and are required to make a reasonable effort to schedule family and medical leave such as not to unduly disrupt the operations of their employer.

• Employees who worked for the employer for at least 120 days before beginning the leave are entitled to be restored to the same or equivalent position at the conclusion of the leave.

• Employers are required to maintain an employee’s healthcare benefits while on leave as if the employee had worked continuously during the leave. The employee, however, is still required to pay their fair share of the cost of the healthcare benefits.

• Employers may seek the VEC’s approval to meet the statutory obligations when using a private plan, as long as the plan meets the specific requirements enumerated in the statute. Those employers with private plans must reapply to the VEC to renew approval of their private plans every two (2) years.

• The statute empowers the VEC to take enforcement action against employers including filing civil actions, for unpaid contributions at an interest rate of 1.5% per month from the date payment is due.

• The statute requires a posting requirement including in English, Spanish and any language that is the first language spoken by at least 5% of the employee’s workforce.

SESCO Staff Recommendations

Please consider the following staff recommendations to ensure compliance:

• Employers, as with many of these new regulations, must have their current employee handbook reviewed and revised to ensure compliance with this new paid family and medical leave law. All related policies to include paid sick leave, vacation, PTO and other related leave laws must be challenged as well. All handbook reviews are conducted by one of SESCO’s staff attorneys. SESCO retainer clients (monthly service agreement) receive these reviews at no additional charge.

• Implement new forms to ensure compliance. SESCO has developed forms and they can be obtained by calling Tonya Roark at 423-764-4127.

• Train leadership as well as employees on their rights as well as responsibilities.

• Current employers with 50 or more employees, already complying with the federal DOL’s family and medical leave will need to revise their policy to state that leave will run concurrently with Virginia’s new paid family and medical leave act.

• It is critical that SESCO clients contact us when an employee may request PMFL so that we can assist in ensuring compliance with not only leave requirements but also documentation. Other laws will come into play such as the Americans with Disabilities Act as Amended, return to work – fitness for duty and others.

Heat Safety Standard

Virginia Statute SB288

The Virginia Safety and Health Codes Board is required to develop and adopt heat illness regulations by May 1, 2028.

This law will apply to employees working indoors and outdoors and the regulations will include requirements for employers to:

• Provide water, access to shade or climate-controlled environments when practical.

• Rest periods.

• Acclimatization to working in heat.

• Effective training regarding heat illness prevention.

• Implement high-heat procedures when the temperature equals to or exceeds 80 degrees Fahrenheit.

• Establish effective emergency response procedures for heat related illnesses.

The statute will provide employer exemptions for:

• Heat exposure during the provision of emergency related services that involve emergency law enforcement, emergency medical services, firefighting services, rescue and evacuation operations or emergency restoration of essential utilities including electric and telecommunication utilities.

• Heat exposure lasting no longer than 15 consecutive minutes.

SESCO Staff Recommendations

Employers will be required to develop new policies to ensure compliance. SESCO will monitor the Virginia Safety and Health Codes Board’s final heat illness regulations and subsequently recommend policy to our clients.

We urge all retainer clients (monthly service agreement) to contact us to discuss compliance with these new and complicated regulations. We suggest that SESCO clients have their policies reviewed and, most importantly, communicate new policies and practices to all leadership and employees. There are many rumors, mostly false, surrounding these laws and regulations and the sooner employers can fill the void with the facts of policies and procedures the better.

For those employers who are not SESCO retainer clients, our monthly service agreement starts as low as $40.00 per month and provides the following:

• Unlimited telephone, research and email consulting

• Up to four (4) consulting hours per annum

• Free annual employee handbook review with follow-up report

• Discounts on requested consulting