There are several Virginia and federal compliance deadlines set for January 1, 2025 and another for July 1, 2025. Below are key items to have in place along with some suggested best practices:
1. Virginia minimum wage increase
Effective January 1, 2025, the Virginia minimum wage will increase from $12.00 to $12.41.
Although the General Assembly voted down the proposed $15.00 minimum wage increase for 2025, current law requires the Commissioner of the Virginia Department of Labor to adjust the minimum wage annually by the Average Consumer Price Index for all items, urban consumers (CPI-U). The 2024 increase was 3.4%. This adjustment will happen every year going forward in accordance with the CPI-U for that year. See the Virginia Department of Labor and Industry guidance on the increase.
- Action item: Audit all hourly employees to ensure no employee earns less than $12.41 per hour
2. DOL Salary threshold increase for July 1, 2024 and January 1, 2025 is stricken down and set aside
The Department of Labor issued a final rule that increased the salary threshold for Fair Labor Standards Act “white-collar” and “highly compensated” exempt employees. The rule established increases in two phases, and the first went into effect on July 1, 2024. The second was set to take effect on January 1, 2025 as follows:.png)
On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated and set aside the DOL final rule on a nationwide basis. This means the July 1, 2024 increases are nullified, and the January 1, 2025 will not take effect.
It remains to be seen if the DOL will appeal this decision to the 5th Circuit Court of Appeals. For now, the increases are stayed. Please see the FordHarrison legal alert for more information about navigating this issue.
- Action Item: Work with counsel to determine the best path for navigating the DOL Final Rule, including whether to revise your salary structures again in light of the court’s ruling regarding the July 1, 2024 increase.
3. Virginia Employment Commission Changes - July 1, 2025
a. Tax Rate Hike Notices Coming Mid-December
The Virginia Employment Commission has stated that the tax rate on unemployment claims will be rising for 2025 (rates have apparently been frozen since COVID), and notices will be coming out in mid-December. This means you will want to be sure to contest cases that are due to misconduct because awards of benefits will have increased financial consequences. In order to contest those cases, you need to make sure you are getting notice of the employee’s filing. Anecdotally, we have determined that many clients have not been receiving the VEC’s notice of request for information from the employer. The VEC states that it is currently mailing and emailing the notices for the past several months. However, the VEC is recommending that all employers move to SIDES (referenced below). Because regular mail is so slow, the request for information may be received untimely, and if the person receiving the email is no longer there, the request will be missed. This is extremely important because starting July 1, 2025, a regimen of fees and legal consequences will be applied to employers who cannot prove that the Commission did not deliver the request to the physical or electronic mailing address specified in writing by the employer. This is much different than an employer saying that they never received what was delivered to the mail or email address. See Virginia Code § 60.2-619.
b. State Information Data Exchange Systems (“SIDES”)
SIDES is an online system that sends notices of claims of benefits to employers and provides an online mechanism for employers to submit required responses.
Because an employer has only 10 days to respond to the VEC’s request for information, and because the mail is so slow, or someone may not be monitoring a particular email, the VEC recommends that Virginia employers sign up for SIDES. Here is the administrative code section that establishes SIDES.
- Action Items: (1) register for SIDES here, (2) ensure all mailing addresses with VEC are up to date, and (3) periodically review the current VEC online portal to ensure no new claims have been filed.
4. “Ethnic Origin” is now a protected class in Virginia
The General Assembly has added “ethnic origin” as a protected category under the Virginia Human Rights Act. This means that discrimination, harassment or retaliation based on an employee’s ancestry (i.e., where their ethnic group of people originated) can be the basis for a private cause of action.
- Action items: (1) Ensure anti-discrimination/anti-harassment policies are updated to include “ethnic origin,” and (2) include “ethnic origin” topics in anti-discrimination/anti-harassment training.
5. RetirePath Virginia
The General Assembly enacted a law that requires certain employers to participate in RetirePath Virginia if they do not offer a retirement savings plan for employees. It is administered by private-sector financial firms and managed by Commonwealth Savers, formerly known as Virginia529, an independent agency of the Commonwealth of Virginia. Employers are required to register if they meet the following criteria:
(1) operated for two or more years,
(2) have 25 or more employees, and
(3) do not offer a qualifying retirement account option.
If the above applies, employees of registered employers are automatically enrolled in RetirePath Virginia, triggering withholdings (if the employee does not opt out within 30 days). If an employee does not want to participate, they must opt out. For covered employers, employer registration was required as of February 2024. If a covered employer fails to register, they could face civil penalties of up to $200 per employee. Even if an employer is not required to register, eligible employees may be allowed to open a RetirePath account.
- Action item: Employers need to review the RetirePath VA website (or connect with a RetirePath VA representative) to determine coverage.
6. Beneficial Ownership Information Report (“BOIR”)
The federal Corporate Transparency Act has a new requirement that certain businesses report information to the Federal Crimes Enforcement Network (“FinCEN”). The deadline to submit required information is January 1, 2025.
- Step 1: Determine whether the company needs to report. Many Limited Liability Companies and Corporations need to report. Some businesses are exempt. FinCEN published guidance to help businesses determine if they are exempt.
- Step 2: Identify all beneficial owners. A beneficial owner exercises substantial control over the business and has at least a 25% ownership interest, with some other considerations. See the previous guidance link).
- Step 3: Report required beneficial ownership to FinCEN. See the attached instructions for submitting the Beneficial Ownership Information Report (BOIR).
Failure to submit the BOIR by January 1, 2025, could lead to civil penalties.
- Action Items: (1) review the FinCEN guidance, and (2) work with counsel to verify reporting obligations.
