Virginia Paid Family and Medical Leave Bill: What Small Business Owners Must Know About SB2
The Virginia General Assembly Passed SB2. It awaits Governor Spanberger's action.
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March 25, 2026
Written by Tricia Dunlap
Tricia’s expertise centers on corporate law. She helps companies and individuals navigate: fiduciary duties, shareholder rights and corresponding corporate obligations, boards of director decision-making or conflict issues, and corporate officer responsibilities.
This blog post covers the original version of Virginia’s Paid Family and Medical Leave bill (SB 2) as passed by the General Assembly BEFORE Governor Spanberger amended it.
Executive Summary
Virginia’s General Assembly passed Senate Bill 2 on March 13, 2026, creating the Virginia Paid Family and Medical Leave Insurance Program.
If signed by Governor Spanberger as written, then starting April 1, 2028, every private employer in Virginia must begin collecting and remitting payroll contributions. Starting December 1, 2028, eligible employees can draw up to 12 weeks of paid leave benefits per benefit year for a qualifying family or medical reason. There is no small-business exemption. Every employer — from a sole proprietor with one employee to a company with hundreds — is covered.
This is a high level overview of SB2. For additional resources, click the button below.
SB2 Creates Significant Financial and Operational Burdens on Small Businesses
SB2 applies to every private employer. A government managed fund will pay employees for up to twelve weeks of leave. The definitions are extremely broad. And the law carries significant financial penalties for employers who get it wrong. Compliance is mandatory. If signed by Governor Spanberger, the new payroll taxes begin April 2028. This article explains what the law requires, what it will cost your business, and what you need to do now.
What the Law Creates
SB2 creates the Paid Family and Medical Leave Insurance Program (PFML), administered by the Virginia Employment Commission (VEC). The program is funded by mandatory payroll contributions shared 50/50 between employers and employees. The payroll contributions are pooled into a trust fund from which eligible employees draw benefits when they take qualifying leave. The Commissioner of the VEC will set the contribution rate annually, with the first rate announced by October 1, 2027. Financial modeling upon which the bill was based used a total tax rate of .72%. Every private-sector employer in Virginia is covered. There is no minimum employee threshold for coverage. Businesses with fewer than ten employees are exempt from paying their half of the payroll tax but must comply with the job protection features of the bill and may be liable to employees if they fail to comply. The only entity excluded from the definition of “employer” is the Commonwealth of Virginia itself. Employees qualify for benefits by meeting a monetary earnings threshold based on wages paid during a defined base period. Employees do not need to have any minimum tenure in their job with your specific business. A new employee could potentially qualify for benefits within their first few days on the job if their earnings from their prior employer during the defined base period met or exceeded the threshold.
What Types of Leave Are Covered?
An eligible employee may take up to 12 weeks of paid leave in a benefit year for any of the following:
- Bonding with a new child (birth, adoption, or foster placement) within the first year
- Caring for a family member with a serious health condition
- The employee’s own serious health condition that prevents them from doing their job
- Caring for a military service member who is a family member
- Qualifying exigency leave tied to a family member’s active military duty
- Seeking safety services related to domestic violence, harassment, sexual assault, or stalking
The definitions matter — and they are broad. “Family member” includes not just spouses and children, but grandparents, grandchildren, siblings, domestic partners, adult children of any age, and “any individual whose close association with the employee is the equivalent of a family relationship.” “Serious health condition” includes physical and mental health conditions requiring continuing treatment by a health care provider.
What Employees Receive
Employees on qualifying leave receive 80 percent of their average weekly wages for up to twelve weeks. Their minimum payment is $100 per week and the maximum they can receive is equal to 100 percent of the Virginia state average weekly wage ($1507.01 as of March, 2026; updated annually by the Va Dept. of Labor). Payments are made every two weeks directly from the state fund.
When an employee takes PFML leave, SB2 requires employers to:
- Restore their position. Return the employee to the same job they held before leave — or an equivalent position with the same pay, benefits, and working conditions.
- Maintain their health insurance. Continue coverage on the same terms throughout the leave period, as if they never left. Because the employee will not be on payroll during leave, the employer must invoice the employee for the employee’s share of health insurance costs.
- Keep leave off their attendance record. You cannot count PFML absences against the employee under any attendance or points-based policy.
- Avoid any adverse action. Demoting, disciplining, or terminating an employee because they used — or even requested — PFML benefits is prohibited and creates liability.
- Understand that protection starts on Day 1. These obligations attach the moment an employee begins receiving benefits, with no probationary period. An employee hired last week who qualifies based on prior wages gets full job protection immediately.
- Tread carefully with the small-employer exception. Employers with fewer than 50 employees may be able to deny job restoration if they can prove “substantial and grievous economic injury” — but this is a high bar, requires affirmative action on your part, and carries significant litigation risk if not thoroughly documented.
The "Benefit Year" Problem
This is one of the most operationally challenging features of SB2 for small employers. Each employee’s “benefit year” is unique to that employee because SB2 counts a benefit year as 52 weeks beginning on the date that individual employee first takes leave — not on January 1 or any other fixed date. That means your 15-employee business could have 15 different benefit year start dates running simultaneously, each requiring separate tracking. No single system reset applies across your workforce.
Other Compliance Mandates from SB2
- Virginia employers must provide written notice of PFML rights and the benefits available at hiring, annually, and whenever leave is requested or anticipated. The notice must be in English, Spanish, and any language spoken as a first language by at least 5% of your workforce.
- Virginia employers must display the Commission’s official PFML poster in a conspicuous location at every workplace.
- Employers may apply to the VEC for approval to use a private plan instead of the state fund. A private plan must provide benefits equal to or greater than the state program in every respect.
- If an employee’s leave also qualifies as FMLA leave, both run concurrently.
Examples of How Employees Can Use PFML
To help people understand the impact SB2 could have, we are providing the following hypothetical scenarios:
The “Close Friend” as Equivalent Family Member
Rachel Kowalski has worked at Piedmont Printing for three years. Her college roommate, Dana Nguyen, who lives two streets away, is diagnosed with breast cancer requiring outpatient chemotherapy. Rachel and Dana have been close friends for 15 years. They are not related by blood or marriage, have never lived together as adults, and have no domestic partnership of any kind. Rachel submits a PFML claim to care for Dana. In the certification, she states that her relationship with Dana “is the equivalent of a family relationship” based on the length and depth of their friendship. She obtains a certification from Dana’s oncologist confirming the serious health condition. The VEC approves the claim. Rachel takes 8 weeks of paid leave. The employer, Tom Briggs, learns of the claim only through the notice he receives. He has no way to contest the characterization of Rachel’s relationship with Dana. Any inquiry he makes into the nature of the relationship risks a retaliation claim. Statutory Hook: § 60.2-800 — “any individual whose close association…is the equivalent of a family relationship”
The Adult Child With No Disability — Unlimited Age
Frank Delmonico owns a restaurant with 9 employees. His line cook, Patrice Williams, has a 42-year-old son, Jerome, who lives independently, holds a job, and is not incapacitated. Jerome develops severe lower back pain requiring physical therapy twice a week for 12 weeks. Patrice files for PFML leave to “care for” Jerome. Because Jerome is her child — regardless of age — and because his condition qualifies as a serious health condition, Patrice’s claim is approvable. The fact that Jerome is a fully independent adult with his own support system is legally irrelevant. Patrice takes the full 12 weeks. Frank must keep her position open, maintain her health insurance, and cannot count her absence against her attendance record. Statutory Hook: § 60.2-800 — “child” includes “a child of any age, including an adult child”
The Unregistered Domestic Partner — Roommate as Qualifying Relative
Luis Moreno and Greg Shepard share a house in Roanoke for economic reasons. They split rent and utilities. They are not romantically involved and have no legal relationship. Greg suffers a serious health condition requiring inpatient surgery and a 6-week recovery. Luis files a PFML claim to care for Greg, stating he is his domestic partner. He identifies the following “nexus of factors”: common householding (shared residence), shared budgeting (joint payment of rent and utilities), and a long personal friendship (signs of close association). No formal registration is required under SB2. The VEC has no mechanism to investigate the nature of the relationship beyond the submitted documentation. Luis’s employer, Sandra Finch at Finch Landscape Services, receives notice and cannot contest the claim. Luis takes 6 weeks of paid leave. Statutory Hook: § 60.2-800 — domestic partner defined by “nexus of factors” including common householding and shared budgeting
The “In Loco Parentis” Child Relationship — Anyone’s Child
Denise Hartley is an office manager at a small accounting firm. Her neighbor’s 8-year-old daughter, Sophie, frequently stays at Denise’s home after school while Sophie’s parents work. Sophie develops a serious respiratory illness requiring multiple hospitalizations. Denise claims PFML leave to care for Sophie, asserting she stands in loco parentis. Under SB2 (which mirrors FMLA language on this point), no adoption or foster placement is required; only day-to-day responsibility for the child’s care is needed to qualify. Denise’s employer cannot question whether Denise’s relationship with Sophie truly constitutes in loco parentis without risking a retaliation claim. Denise takes 10 weeks of intermittent leave over the school year. Statutory Hook: § 60.2-800 — family member includes “a child to whom the covered individual stands in loco parentis”
If Governor Spanberger Signs SB2 Into Law, Here Are Practical Takeaways:
You have approximately two years before contributions begin. That is enough time to prepare if you start now — and not enough time if you wait.
- Action 1: Audit your payroll system.
Confirm your payroll provider can track individual employee benefit years, calculate per-employee deductions at the correct contribution rate, and remit contributions to the VEC. If they cannot, start evaluating providers who will be ready by April 1, 2028.
- Action 2: Update your employee handbook.
Your attendance, leave, and anti-retaliation policies will need to be amended to reflect SB2’s requirements before benefits go live. Any attendance policy that counts leave as an absence is unlawful under SB2.
- Action 3: Evaluate a private plan.
If you already offer a competitive leave or disability benefit package, a Commission-approved private plan may reduce administrative duplication. This analysis is best done before the contribution rates are set.
- Action 4: Plan for benefit year tracking.
Identify now how you will track each employee’s individual benefit year. A spreadsheet is not a sustainable answer for any business with more than a handful of employees. Budget for a system that can handle it.
- Action 5: Watch the VEC.
Regulations are due by April 1, 2028. The contribution rate is due by October 1, 2027. Both will significantly affect your planning. We will publish updates as they are released.
- Action 6: Update Employment Agreements
Employment Agreements are essential tools for protecting your business’ intellectual property, proprietary information, and trade secrets. Consult with your Dunlap Law attorney about necessary changes to EA terms.
Related Services
Virginia SB2 touches several areas where Dunlap Law regularly assists small business owners:
- Employee Handbook and Policy Updates — Your existing leave, attendance, and anti-retaliation policies must be reviewed and amended for SB2 compliance before April 2028. Learn more here.
- Operating and Shareholder Agreements — If your business structure involves owner-employees, your operating agreement may need to address how PFML obligations interact with owner compensation and governance. Learn more here.
- Contract Analysis & Advice — If you are evaluating a private plan, the plan documents must be reviewed to confirm they meet every statutory minimum requirement before the Commission will approve them. Learn more here.
- Business Formation — If you are starting a new business, PFML obligations are now a day-one compliance consideration that should be factored into your structure, staffing plan, and payroll setup. Learn more here.
This material is for informational purposes only. It is not intended as legal advice and does not create an attorney-client relationship between its readers and Dunlap Law. Consult an attorney before taking action on issues outlined here. This is attorney ADVERTISING MATERIAL.
FREQUENTLY ASKED QUESTIONS:
When does Virginia's paid family and medical leave law take effect for employers?
On a party-line vote, Democrats in the Virginia General Assembly passed SB2 on March 13, 2026. As of March 23, 2026, the bill awaits action by Governor Spanberger. She may sign it, veto it, or return it to the General Assembly with revisions. Governor Spanberger may be reached at 804-786-2211 or abigail.spanberger@governor.virginia.gov
How much will Virginia's paid family and medical leave program cost my small business?
The contribution rate has not yet been set — it will be published by October 2027. For businesses with more than 10 employees, employers must pay at least 50% of the per-employee contribution (and may deduct the other 50% from the employee’s wages). Businesses with 10 or fewer employees are only required to remit the portion deducted from employee wages. Every employer also bears the indirect cost of managing leave absences, maintaining health insurance during leave, and potentially hiring and training temporary replacements.
What counts as a "serious health condition" under SB2?
SB2 defines “serious health condition” to include any illness, injury, impairment, pregnancy, recovery from childbirth, or physical or mental condition that involves inpatient care or continuing treatment by a health care provider. The definition is broad enough to encompass many chronic conditions — including mental health conditions treated by a licensed clinical social worker — that do not significantly impair daily functioning. Licensed clinical social workers are specifically listed as qualifying providers. An employee receiving ongoing therapy for anxiety, depression, or another diagnosed condition may qualify for intermittent paid leave tied to treatment appointments and acute episodes.