Quick Hits

• The Third Circuit ruled that the FLSA does not recognize claims for “gap time,” which refers to unpaid hours that do not exceed overtime limits. 
• The court declined to rely on the DOL’s guidance suggesting gap time claims are cognizable, finding the FLSA to be unambiguous and the DOL’s guidance otherwise unpersuasive. 
• This decision eliminates certain gap time claims in the Third Circuit, an area of aggressive DOL enforcement.

The Third Circuit ruling in Secretary of United States Department of Labor v. Comprehensive Healthcare Management Services LLC is a significant win for employers in finding that claims for gap time—or uncompensated time worked that does not exceed the overtime limit—are not cognizable under the FLSA.

The appellate court further handed the employer a partial win in finding that the district court applied improper standards in determining that certain employees were nonexempt, remanding that issue to the district court for proper analysis. However, the appellate court found that the district court had applied the proper burden of proof and did not err in certain disputed factual findings related to the employer’s recordkeeping practices that were based on testimony from employees.  

Background

The case stems from the DOL’s investigation of Comprehensive Healthcare Management Services, which owns and operates fifteen residential nursing, rehabilitation, and assisted living facilities across Pennsylvania. The investigation began in 2017 and resulted in the DOL filing suit in 2018 on behalf of nearly 6,000 employees, alleging multiple FLSA violations. After a bench trial in January 2024, the district court found in favor of the DOL and awarded $35,804,438.20 in damages.

The district court ruled against the employer on several FLSA violations, including failures to maintain accurate time and pay records, paying employees based on scheduled hours rather than hours actually worked, failing to compensate employees for working through meal breaks, miscalculating overtime rates by excluding shift differentials and bonuses from the regular rate, and misclassifying certain employees as exempt from overtime.

Overtime Gap Time Claims Are Not Cognizable Under the FLSA

A panel for the Third Circuit ruled 2–1 that the claims for gap time are not cognizable under the FLSA. Gap time refers to uncompensated time that does not exceed the overtime limit, where the employee’s pay rate is sufficiently above the minimum so that the employee is still paid a minimum wage when averaged across all time worked in the period.

In the majority opinion, Chief Judge Michael Chagares recognized that while the circuit has previously rejected claims for “pure” gap time, meaning unpaid work during pay periods without overtime, this case presented the issue of “overtime” gap time, which involves compensation for nonovertime hours worked during pay periods when the employee did work overtime. For example, a situation in which an employee works forty-three hours in a week, but the employer only pays the employee for thirty-eight hours of work and three hours of overtime work.

The majority held that the FLSA’s text is clear. Employers must pay a minimum wage under Section 206 and overtime pay under Section 207, but the statute “does not contemplate overtime gap time.” In reaching this conclusion, the majority rejected the DOL’s argument that since the FLSA requires the overtime calculation be based on an employee’s “regular rate” of pay, employees must be paid at their “regular rate” for all hours worked before overtime. The majority said that “the statutory text simply does not support that inferential leap.”

The majority also declined to defer to the DOL’s longstanding interpretive guidance that overtime compensation has not been paid unless all straight-time compensation has been paid first. The majority found the FLSA to be unambiguous and, as such, found no need to look to agency guidance. The majority opinion further noted that even under so-called Skidmore agency deference (which finds that “an agency’s interpretation is ‘entitled to respect …, but only to the extent that it has the power to persuade.’”), the DOL’s guidance was unpersuasive.

“While the Department’s reading may better serve the policy objective of the FLSA overtime provision by ensuring employers do not mitigate or skirt the financial pressures of working their employees above the forty-hour threshold, that does not allow us to read into the FLSA a remedy that Congress did not create,” the majority opinion stated.

The Partial Dissent Finds FLSA ‘Regular Rate’ Ambiguous

Judge Jane Roth concurred in part but dissented from the majority on the overtime gap time issue. Judge Roth argued that the term “regular rate” is ambiguous because it is unclear whether it refers to the rate at which the employer contracted with the employee or the rate the employer actually paid, and that the only way to resolve that ambiguity is to require employers to pay all forty hours of straight time before calculating overtime. She also would have given Skidmore deference to the DOL’s longstanding guidance.

The majority addressed this argument in a footnote, acknowledging that they “agree that these rates should be the same” but that the question before it was “what happens when, due to the employer’s errors, they are not [the same]—and, more specifically, does the FLSA provide a remedy for that error.” The majority said they “do not believe that it does.”

Other Holdings

Proper Burden-Shifting

The Third Circuit found no reversible error in how the district court applied the burden-shifting framework to the DOL’s claims. The court concluded that the damages for the disputed claims—pay-by-scheduled work versus hours worked and incorrect regular rate calculations—were based on the employer’s own records and were not determined by the burden-shifting framework applied when an employer has inadequate recordkeeping.

Factual Findings—No Clear Error

The appellate court further found no clear error on the three challenged factual findings of the district court: (1) that the pay-by-schedule practices had continued past 2018; (2) that the regular-rate miscalculations had continued past July 2019; and (3) the conclusion that employees worked through unpaid meal periods; finding that these conclusions were backed by DOL witness testimony, including the testimony of fourteen employees. While the employer argued that the DOL’s evidence was “quantitatively insufficient because only a small number of witnesses testified on behalf of the nearly 6,000 employees on whose behalf the Secretary brought claims,” the appellate court stated that it “often endorsed the practice of using ‘representative employees to prove violations with respect to all employee,’” and that “’there is no brightline test establishing the percentage of employees necessary to achieve a representative sample.’” 

Exempt Status Findings Remanded

The employer partially prevailed on its challenge to the district court’s findings that certain employees were nonexempt, despite the DOL’s arguments to the contrary. The court found the district court had applied outdated standards that exemptions are to be “construed narrowly against the employer” and that an employer must “demonstrate that an employee ‘plainly and unmistakably’ falls within an exemption.” The Third Circuit explained that, in accordance with rulings by the Supreme Court of the United States, FLSA exemptions “must be given a fair reading,” not construed narrowly against the employer, and that “an employer bears the burden of proving an employee’s exempt status by a preponderance of the evidence, not plainly and unmistakably.” The appellate court remanded the issue to the district court to apply the correct standards.

Key Takeaways

This decision is a significant development for employers in the Third Circuit. The rejection of overtime gap-time claims narrows potential FLSA liability and eliminates a category of damages that the DOL has aggressively pursued. The decision also makes clear the burden of proof employers must meet to establish an employee’s exempt status is less burdensome than previously applied. The decision also underscores that courts may credit the testimony of a small number of employees to find systemic FLSA violations for a much larger class of employees. 

Ogletree Deakins’ Morristown office will continue to monitor developments and will provide updates on the Employment Law, Healthcare, and Wage and Hour blogs as additional information becomes available.

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Quick Hits

• A federal district court in New Jersey ruled that adult performers on an online streaming platform are independent contractors under the FLSA but qualify as employees under New Jersey’s stricter ABC test.
• The court found that the performers could not be classified as independent contractors under the ABC test because they operated within the operator’s usual course of business and not outside its places of business by providing services on the operator’s online digital platform.
• The court explained that under New Jersey’s ABC test, an enterprise’s place of business includes any location where core commercial services are being executed, including online digital platforms.
• This decision highlights how it may be more difficult for employers to classify workers as independent contractors under New Jersey’s ABC test than under FLSA and has implications for gig economy companies.

In the case, Tomasello v. ICF Technology Inc., a group of adult entertainers who livestream on the “Streamate” digital platform asserted collective and individual claims under the FLSA, the New Jersey Wage and Hour Law, and the New Jersey Wage Payment Law. They alleged the platform operator misclassified them as independent contractors, retained 65 percent of their online tips, and paid them less than minimum wage. The platform operator argued that the performers are independent contractors and thus not employees under the FLSA or New Jersey wage-and-hour laws.

The federal district court held that while the performers were independent contractors under the FLSA’s “economic reality test,” they did not meet New Jersey’s “ABC test.” Specifically, the court found that the operator could not show that the performers’ livestreamed performances on the operator’s digital platform were “outside of all places of [its] business” nor outside its “usual course of business.”

“Although Plaintiffs possess the operational hallmarks of independent contractors under federal law, this Court finds that they remain statutory employees under New Jersey’s unyielding ABC framework,” Judge Madeline Cox Arleo wrote in the court’s decision.

Notably, the decision comes just weeks after the New Jersey Department of Labor and Workforce Development (NJDOL) adopted final regulations on New Jersey’s ABC test, set to go into effect on October 1, 2026. The court noted these new regulations do not govern the claims in this case, but do not “disrupt” its analysis since the “statutory ABC test remains the mandatory framework.”

FLSA Economic Reality Test

The court examined the FLSA claims under the Third Circuit’s six-factor economic reality test, under which courts balance out the factors looking at the overall economic reality of the worker-putative employer relationship. The court explained that under the test, no single factor is dispositive, and courts should look at the totality of the circumstances.

According to the decision, the performers provided livestream content on the Streamate platform, offering some free and some paid content. The platform took a share of the revenue generated by the paid-for content. The performers were bound by “Performer Agreements” and certain rules and guidelines for streaming.

While the platform required employers to comply with some rules on content and production, performers were allowed to use their screen name across various platforms and were not restricted from performing on competitor websites. Performers could also set their own schedules and prices. Per the decision, performers also purchased their own equipment.

Under these facts, the court found that the “[p]erformers operate as independent economic entities in business for themselves.” In particular, the court noted that they set their own shooting locations and managed their own businesses, including their own digital marketing.

“This lack of economic dependence is fundamentally confirmed by the fact that Performers retain the absolute right to livestream concurrently on the Streamate website and alternative[ly], [the right to] stream on competing digital platform[s],” the court said.

New Jersey’s Three-Pronged ABC Test

While the court found the performers independent to be contractors under the FLSA, the court came to a different conclusion when analyzing the facts under New Jersey’s ABC test. The three-pronged test looks at whether: (A) the worker is free from control or direction; (B) a worker’s services are outside of the putative employer’s business or “outside of all the places of business of the enterprise,” and (C) the worker is engaged in an independently established trade, occupation, profession, or business.

The court recognized that the ABC test is a “conjunctive standard,” meaning that a putative employer must prove all three prongs, A, B, and C, to “secure independent contractor classification.” While the court found that the adult performers had sufficient control over their workers to satisfy Prong A, the court found the operator failed to satisfy Prong B, and thus the performers were not independent contractors. Since the operator failed Prong B in the conjunctive test, the court declined to analyze Prong C.

The court explained that “Prong B requires Defendants to show either that the service performed by the worker is entirely outside the usual course of the hiring entity’s business, or that such service is performed outside of all the places of business of the enterprise.” (Emphasis added).

The operator had argued that since the performers work in an entirely digital, gig-economy platform with performances actually being performed at the performers’ own locations, the performers were outside of the usual course of business and not in any of the operator’s physical places of business.

But the court explained that in a “digital platform economy, an online entity’s ‘usual course of business’ is defined not by the code running its servers, but by the specific consumer-facing services it holds out to the open marketplace.” In this case, the “operational reality of the Streamate platform demonstrates that Defendants’ entire business model is dependent on the continuous generation of web-based adult content Performers create.” While the platform operator argued it is a “technology company,” the facts indicate that it curates a market, monetizes, and profits from the performers’ livestreaming services and that the performers are “integral” to the business, the court said.

Further, the court explained that an entity’s “place of business” under Prong B “is not bounded by brick-and-mortar walls; it extends to any proprietary digital infrastructure that serves as the

primary commercial venue for the company’s operations.” In this case, the platform is not simply “a passive internet utility” but a “highly integrated, proprietary workplace where customers are aggregated, financial transactions are executed, and live content is distributed and policed,” the court said.  

“Because the digital platform functions as the indispensable commercial venue where the business operates, the services are not performed ‘outside of all places of business’ of the enterprise,” the court said. “[B]y logging into Streamate, Plaintiffs are effectively performing their services within the virtual footprint of the enterprise.”

Key Takeaways

The decision highlights differences in the analyses to assess independent contractor status between the Third Circuit’s “economic reality test” under the FLSA and New Jersey’s “more stringent” three-pronged “ABC test.” The decision demonstrates that courts can reach divergent conclusions when analyzing the same set of facts under the FLSA and under New Jersey’s wage and hour laws.  It also demonstrates how New Jersey’s ABC test, which requires employers to satisfy all three factors, makes it difficult for employers to classify workers as independent contractors.

Employers with workers in New Jersey classified as independent contractors may want to review the extent to which those workers may be considered employees under New Jersey law. In particular, the decision suggests that workers who only use a company’s online platform to generate content, and who are typically considered independent contractors under federal law, may be considered employees under the ABC test. This could have serious implications for technology platform companies or others that participate in the so-called gig economy.

Ogletree Deakins’ Morristown office will continue to monitor developments and will provide updates on the Class Action, Employment Law, New Jersey, Sports and Entertainment, Technology, and Wage and Hour blogs as additional information becomes available.

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Quick Hits

• The NJDOL released its final “ABC test” regulations, which are used to determine whether a worker is an employee or an independent contractor under various New Jersey laws.
• The final regulations, which become effective on October 1, 2026, purport merely to codify court and agency interpretations of the three ABC test prongs, but many in the business community believe the new regulations unfavorably expand existing law.
• While the NJDOL removed some of the more controversial provisions found in the proposed regulations, the final regulations will inevitably constrain many businesses’ efforts to classify workers as independent contractors.

The “ABC test” is used to determine whether a worker is an independent contractor or an employee under various New Jersey laws, including the New Jersey Wage and Hour Law, Wage Payment Law, and Unemployment Compensation Law. The NJDOL’s final rule largely mirrors the April 2025 proposed regulations, while moderating some of the proposed regulations’ more onerous provisions. Even with these adjustments, however, many New Jersey businesses will still be challenged to lawfully classify workers as independent contractors and insulate themselves from the risk of significant liability upon a misclassification finding by state regulators or employees’ lawyers.

ABC Test Framework

Several New Jersey laws rely on the ABC test to distinguish a covered employee from an excluded independent contractor, including the New Jersey Wage and Hour Law (which, among other things, requires overtime wages for nonexempt employees), the New Jersey Wage Payment Law (which, among other things, strictly limits deductions from employees’ wages), and the New Jersey Unemployment Compensation Law (which requires employers to withhold and remit to the state contributions for unemployment benefits). Under the ABC test, a worker is presumed to be an employee, unless the business can show:

• (A) it “does not exercise control or direction over the individual’s work in fact, and that it does not reserve the right to control or direct the individual’s work”;
• (B) the worker’s “services are outside of the putative employer’s usual course of business or that such services are performed outside of all the putative employer’s places of business”; and
• (C) the worker “is customarily engaged in an independently established trade, occupation, profession, or business.”

The final regulations, N.J.A.C. 12:11, purport to simply gather and combine court and agency interpretations of the ABC test’s historically exacting requirements. But many in the business community believe the new regulations expand existing law and make it even more difficult for employers in New Jersey to classify workers as independent contractors. Some of the more notable provisions of the final regulations are discussed below.

Prong A – Identification of ‘Control’ Factors

Control “Solely” for Compliance Purposes Not Indicative of an Employment Relationship

Prong A of the ABC test focuses on the degree of control the business exercises over the individual’s work. The proposed regulations provided that any control or direction that the putative employer exercised “in order to be in compliance with a law or rule [would] be considered; that is, it [would] be given equal weight to what would be given any other control or direction that the putative employer … exercised.” In response to comments critical of this language, which appeared to penalize a business for complying with the law, the final regulations were revised to provide that “[a]ctions taken by a putative employer solely to comply with federal, state, or local, laws or regulations shall not, standing alone, be considered evidence of control or direction under Prong A.” (Emphasis added.)

While this language sounds helpful, any benefit may be more apparent than real. The agency’s comments to the final regulations even state that this change is “not inconsistent with what was originally proposed.” Stated differently, control that is mandated by legal requirements is still a factor that, in conjunction with other indicia of control, may destroy satisfaction of Prong A. Thus, this “tweak” by the NJDOL is no game-changer favoring the business community.

Removal of Employer-Owned Software Use Sub-Factor

The proposed regulations included a list of nine factors (and many subfactors) that the NJDOL would consider when evaluating whether a worker was free from control or direction. The final regulations removed one sub-factor (i.e., “whether the putative employer requires the individual to use a digital application or software in the course of performing the services that is primarily or unilaterally controlled by the putative employer”) but retained all the others. This change benefits certain gig economy businesses, but it does not provide a safe harbor from all risk under Prong A.

Prong B – ‘Outside of All the Places of Business’ or ‘Outside the Usual Course of the Business’

A company can establish a worker’s independent contractor status under Prong B in two separate ways, either by showing that the worker’s services are outside of the company’s “usual course of business” or that the services performed are outside of all the company’s “places of business.” The final regulations state that “the phrase ‘places of business’ refers to locations where the enterprise has a physical plant or conducts an integral part of its business.” (Emphasis added.)

To address commenters’ concerns about confusion over what may be considered a company’s “places of business,” the final regulations removed examples of locations where a putative employer conducts “an integral part of its business.” Commenters also expressed concern that the examples compelled a certain result to the Prong B analysis, contrary to what is supposed to be a fact-sensitive inquiry.

However, the final regulations retained examples of services that would “typically be outside of the putative employer’s usual course of business” and services that “typically” would not. The use of the word “typically” reinforces the point that the resolution of the issue will depend on the particular facts at issue. (Emphasis added.)

The final rule also added language making clear that a remote worker’s “personal residence where they perform remote work … shall not be considered among the putative employer’s places of business.”

“This is especially true where the putative employer has a physical office, plant, or other location from which the individual also works and from which the putative employer conducts an integral part of their business,” the final regulations state.

Prong C – Independent Business

The final regulations largely mirror the proposed regulations for Prong C—that the “individual is customarily engaged in an independently established trade…”—with one exception. The final regulations omit the following “exclusivity” language that appeared in the proposed regulations:

[W]hat is relevant is not whether an individual was free to work for others, but rather, whether the individual did perform services for, and receive remuneration for the performance of such services from others during the relevant period. (Emphasis added.)

Although this omission might appear to helpfully indicate that mere freedom to work for others is relevant, not actual work and income from others is required to satisfy Prong C, the NJDOL’s comments accompanying the final regulations dispel such optimism. According to the NJDOL, the deleted language is “superfluous” because other language in the final regulations makes clear that “at all times, including during the time the individual is performing work for and receiving remuneration from the putative employer, the individual is not dependent on that work and that remuneration for the survival of the individual’s independently established enterprise.”

Statutory Exemptions Preserved

The final regulations add a new subsection to preserve specific statutory exemptions from coverage under specific statutes. The new subsection states that nothing in the regulations “should be construed to alter or eliminate statutory exemptions from coverage,” such as covered “employment” under the Unemployment Compensation Law and Temporary Disability Benefits Law or overtime exemptions under the Wage and Hour Law. The NJDOL explained that while nothing in the rule was meant to override these existing exemptions, the added language should “allay the commenters’ concerns” that the rule could be read to do so.

More Recent Cases Interpreting the ABC Test

Since the NJDOL released the final regulations, courts in New Jersey have issued noteworthy decisions interpreting New Jersey’s ABC test, at least as under principles in place prior to the final regulations. The U.S. District Court for the District of New Jersey issued a decision concluding that web performers, or streamers, on a streaming platform were not independent contractors under the ABC test, even if they were properly classified as such under the Fair Labor Standards Act (FLSA). Notably, in interpreting Prong B, the court found that the streamers’ performances on the digital platform were not outside the putative employer’s usual course of business or places of business.

Further, the Superior Court of New Jersey, Appellate Division, released an unpublished decision that remanded a case to the NJDOL for further factfinding under Prong C, noting that the NJDOL did not satisfactorily address the putative employer’s degree of control over customer pricing, which the court held to be relevant to whether the workers operated an independent business.

Key Takeaways

The final regulations codify existing law in a number of ways and reinforce the challenges of seeking to classify workers as independent contractors. The hurdle to “pass the test” remains high.

The NJDOL will continue to evaluate how workers are managed and function to determine whether they are independent contractors, as opposed to how the employer classifies its workers in employment, tax, or other legal documents.

Employers may want to begin reviewing their policies and independent contractor relationships to ensure compliance with the ABC test.

Ogletree Deakins’ Morristown office will continue to monitor developments and will provide updates on the New Jersey and Wage and Hour blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state independent contractor laws, including in New Jersey. Premium-level subscribers have access to comprehensive law summaries; Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.

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Quick Hits

• In Khatabi v. Car Auto Holdings LLC, the Eleventh Circuit recently held that an auto dealership failed to plead the statutory damages cap under Title VII of the Civil Rights Act of 1964, so it waived its right to the cap.
• The Eleventh Circuit reversed a federal district court’s ruling that applied the statutory damages cap to the sexual harassment claim.
• Sexual harassment claims cannot be sent to arbitration, so they are more likely to result in a jury trial.

Under Title VII, the employee-headcount damages cap is $50,000 for employers with 15 to 100 employees; $100,000 for employers with 101 to 200 employees; $200,000 for employers with 201 to 500 employees; and $300,000 for employers with more than 500 employees.

The Eleventh Circuit held that the statutory damages cap is a waivable affirmative defense in a Title VII case. However, in this case, Car Auto Holdings, a car dealership in Miami, failed to preserve the application of the cap in its pleadings—or even raise it at any time before the trial—and was therefore not entitled to it.

Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFFA), employers cannot compel arbitration of a sexual assault or sexual harassment claim. In the Eleventh Circuit (a jurisdiction composed of federal courts in Alabama, Florida, and Georgia), if a Title VII case goes to a trial before a jury, the potential punitive damages in a jury verdict can be as much as $300,000, unless the applicable employee-headcount cap on damages is applied.

Background and Court Rulings

The plaintiff worked at Car Auto Holdings, a dealership with about twenty employees, for about four months. She claimed her supervisor and colleagues frequently sexually harassed her, including calling her “hot for an 18-year-old,” suggesting she should hand out business cards in a bikini, and asking her to “use her good looks” while accompanying male customers on test drives to persuade them to buy cars. She claimed her supervisor and other managers touched her backside, massaged her shoulders, and grabbed and kissed her in the parking lot after work. The plaintiff resigned and sued the dealership for unpaid minimum wages under the Fair Labor Standards Act and sex discrimination under Title VII and the Florida Civil Rights Act (FCRA).

In an unallocated verdict under Title VII and the FCRA, a jury awarded the plaintiff $81,028 in compensatory damages and $750,000 in punitive damages for her sex discrimination claims, for a total of $831,028. The U.S. District Court for the Southern District of Florida, however, ruled that the applicable damages cap should apply and that the plaintiff was entitled to recover maximum punitive damages ($100,000) under the FCRA alone (“the larger of the two caps”), thereby reducing the sex-discrimination damages from $831,028 to $181,028. The plaintiff appealed the decision and judgment.

Reviewing the record on appeal, the Eleventh Circuit Court of Appeals held that the statutory damages cap had never been raised as an affirmative defense (and thus was never preserved) and that the district court had miscalculated the damages award. Because the benefit of the Title VII specific headcount damages cap had not been preserved, and because the jury had not aligned the damages with each statute, the Eleventh Circuit held that the maximum caps on damages available under each statute should apply: $300,000 under Title VII (i.e., Title VII’s uppermost limit) and $100,000 under the FCRA. Because the FCRA doesn’t limit compensatory damages (but does limit punitive damages), the Eleventh Circuit calculated that the correct damages amount should have been $481,028 ($81,028 in compensatory damages + $100,000 in FCRA damages + $300,000 in Title VII damages).

Next Steps

To be safe and effectively utilize the damage caps, employers must plead a statutory damages cap as an affirmative defense in an answer to a Title VII lawsuit and include it in pretrial stipulations. Courts may deem the applicable statutory damages cap waived if an employer waits until after a jury verdict to raise it. Dual-filed claims, such as this one under Title VII and the FCRA, may result in stacked maximum damage caps if a jury awards unallocated damages for violations of both statutes.

Employers may wish to train managers and employees on state and federal laws prohibiting sexual harassment and sex discrimination in the workplace, investigate internal reports of harassment or discrimination, and take the appropriate steps to prevent any harassment or discrimination from continuing.

Ogletree Deakins will continue to monitor developments and will provide updates on the Employment Law and State Developments blogs as additional information becomes available.

William E. Grob is a shareholder in Ogletree Deakins’ Tampa office.

Gretchen M. Lehman is a shareholder in Ogletree Deakins’ Tampa office.

James M. Paul is a shareholder in Ogletree Deakins’ St. Louis office and Tampa office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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Quick Hits

• The Western Occupational and Environmental Medical Association submitted a petition in December 2025 to OSHSB requesting immediate rulemaking action to ban artificial stone fabrication and installation in California.
• Cal/OSHA adopted a respirable silica standard in January 2025 that strengthened workplace safety protections for workers fabricating and installing artificial stone.
• There will also be advisory committees convened on the issue of an emergency regulation and the health hazards posed.

OSHSB’s vote in support of an emergency rulemaking process came in response to a December 2025 petition from the Western Occupational and Environmental Medical Association, which relies on and refers to the “Australian Model” wherein products are completely banned in that country.

OSHSB adopted a permanent respirable silica standard in the general industry sector—which includes artificial stone fabrication and installation—in January 2025, and the standard took effect one month later. The new emergency standard would also be a general industry safety order that would apply to artificial stone fabrication and installation.

OSHSB will also convene advisory committees on the issue of an emergency regulation and the health hazards posed.

Industry representatives expressed opposition to the petition and suggested enforcement and certification solutions to the hazards.

The emergency rulemaking process is a truncated and expedited process to allow a state agency to adopt emergency regulations in response to a situation that calls for immediate action to avoid serious harm to worker health.

If supported by the evidence and analysis, the California Division of Occupational Safety and Health (Cal/OSHA) will submit a finding to OSHSB to support expedited rulemaking and an emergency regulatory process.

Ogletree Deakins’ Workplace Safety and Health Practice Group will continue to monitor developments and provide updates on the California and Workplace Safety and Health blogs as additional information becomes available.

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Quick Hits

• Illinois has postponed proposed rules on notice of AI use to make employment decisions.
• The rules would have implemented the 2024 amendments to the state’s human rights law.
• The IDHR cited the need to collaborate with other state agencies.
• The impact of the postponement on the proposed AI rules is currently unclear.

The surprise move comes just weeks after the agency, on May 15, 2026, published the proposed rules to implement the August 2024 amendments to the Illinois Human Rights Act (IHRA). Publication in the Illinois Register triggered a forty-five-day notice period that now appears to have been halted.

According to the announcement, “IDHR is currently reviewing matters related to the proposed rulemaking and will provide updated information regarding next steps as it becomes available. Postponement is necessary to allow for continued collaboration with other state agencies.”

A public hearing scheduled for June 10, 2026, on the proposed rules “has been temporarily postponed,” IDHR’s announcement stated.

The proposed rules are meant to implement changes to the IHRA made under Illinois House Bill (HB) 3773, Public Act 103-0804, which was enacted in August 2024 and took effect on January 1, 2026. The law prohibits the use of AI that discriminates against employees based on protected characteristics, even if the discrimination is unintentional, and requires employers to provide notice of the use of AI for “recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or [other] terms, privileges or conditions of employment.”

The proposed rules aim to clarify employers’ notice and recordkeeping requirements for their use of AI in employment decisions. Specifically, the proposed rules would clarify that employers must provide notice to employees and prospective employees when covered AI is used “to influence or facilitate a covered employment decision.”

Next Steps

The impact of the postponement on the proposed AI rules is currently unclear. IDHR may consider substantive changes to the rules before receiving public input. The agency cited the need to collaborate with other agencies. IDHR encouraged stakeholders to monitor its Legislative Updates webpage for further updates. In the interim, employers utilizing AI to assist or facilitate employment-related processes in Illinois may wish to remain mindful of the continued applicability of the law, even in the absence of clarifying rules.

Ogletree Deakins’ Chicago office and Technology Practice Group will continue to monitor developments and will provide updates on the Illinois, Cybersecurity and Privacy, Diversity, Equity, and Inclusion Compliance, Employment Law, and Technology blogs as additional information becomes available.

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Quick Hits

• Louisiana’s newly enacted workplace violence prevention law, the “Louisiana Behind the Counter Protection Act,” will take effect on August 1, 2026.
• The law gives employees in customer-facing roles, primarily in retail and hospitality establishments, stronger protection against violence at work.
• The new law increases criminal penalties against offenders for threats and acts of violence against covered employees.

Louisiana’s ‘Behind the Counter Protection Act’

The “Louisiana Behind the Counter Act” (House Bill No. 1238/Act No. 342) expands Louisiana’s existing labor and employment laws, establishing new employment provisions and criminal penalties for threats and acts of workplace violence committed against customer-facing workers. The law specifically prohibits workplace violence against employees who interact with customers at points of transaction, such as checkout counters, service desks, or drive-through windows. Under the new law, “workplace violence” is defined as “any act of violence or credible threat of violence, including but not limited to” the following:

• “assault”;
• “battery”;
• “robbery”;
• “intimidation”;
• “verbal abuse”;
• “threats with a weapon”; or
• “any conduct that places an employee in reasonable fear of physical harm or is directed at an employee while he is performing his duties at a regulated establishment.”

Additionally, businesses with covered employees may display signage to deter workplace violence and caution customers that workplace violence is a crime under Louisiana law. The signage can be obtained through Louisiana Works.

Criminal Penalties

The new law also increases criminal penalties against offenders for violence against covered employees. Prior to this law, simple assault and simple battery carried the same penalties regardless of the victim’s employment status. The new law increases the fines and imprisonment terms for simple battery and simple assault when those offenses are directed at an employee of a business where the employees interact with customers at points of transaction, such as checkout counters, service desks, or drive-through windows.

A simple battery conviction against a covered employee now carries a potential $2,000 fine and/or imprisonment “for not more than two years.” A simple assault conviction against a covered employee now carries a potential $1,000 fine and/or imprisonment for not more than six months.”

Key Takeaways for Employers

Retail, food service, and other businesses with employees who interact with customers at points of transaction, such as checkout counters, drive-through windows, or service desks, may want to audit their workforces to assess whether their employees are covered under the new law.

Louisiana employers with workplace violence prevention policies should review those policies and consider whether to incorporate the law’s “workplace violence” definition and whether to revise employee training to address workplace violence.

Posting signage, while not mandatory, may have practical implications, including preventing violence against employees, boosting employee morale, and demonstrating commitment to employee safety.

Ogletree Deakins’ New Orleans office will continue to monitor developments and will provide updates on the Hospitality, Louisiana, Retail, Workplace Safety and Health, and Workplace Violence Prevention blogs as additional information becomes available.

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Quick Hits

• Unless there is an individual or collective agreement in place, employees in Germany generally have no legal right to workation.
• Without an A1 Certificate, employers risk a double obligation to pay social security contributions.
• German law remains applicable during short-term workation within the EU, and mandatory foreign employee protection laws may also apply.

A recent study by the Fraunhofer Institute for Industrial Engineering and Organization shows how popular this concept has become: 68 percent of respondents are already familiar with the concept of workation, and many respondents reported increased motivation (65 percent) and higher job satisfaction (71 percent). For employers, workation can therefore be both an attractive tool to boost employee satisfaction and a strategic advantage in the competition for skilled workers. According to the Fraunhofer study, only 34 percent of employers currently offer this form of mobile work, which reveals significant untapped potential.

Social Security Law: Risk of Contribution Obligations Abroad

A key risk for employers is the requirement to pay social security contributions both in Germany and abroad. Strictly speaking, employers may have to pay social security contributions abroad from day one when employees work from another EU country during a workation. This risk can be avoided in other EU countries by applying for a so-called A1 certificate in good time, since a workation can—with good arguments—be characterized as a posting, even if the initiative comes from the employees. Once the certificate is issued, German social security law extends to the work performed abroad during the workation.

Notification and Documentation Requirements

Depending on the country, the posting in the form of a workation may need to be registered in advance. Documentation may also be required, such as payroll and social security records. Violations can result in fines and even criminal penalties.

Employment Law

Whether German employment law continues to apply during a workation within the European Union, or whether foreign law applies instead, is determined by the Rome I Regulation. If the parties to the employment contract have not made a choice of law, the contract is governed by the law of the country where the employee habitually works (i.e., more than half of the employee’s time). For a short-term workation within the European Union, German employment law therefore generally continues to apply.

In addition, mandatory foreign employee protection laws may apply. These are provisions that a country considers so important for safeguarding its public interests that they must be observed under all circumstances. Examples include minimum wage laws, occupational health and safety regulations, and working time laws.

Supplemental Insurance

If employees become ill during a posting, the employer generally bears the cost of medically necessary treatment. The German statutory health insurance fund typically reimburses these costs only up to the amount that the treatment would have cost in Germany. If the treatment costs abroad are higher—which is not uncommon—the employer must cover all remaining costs. This also includes any repatriation, which is not reimbursable. Whether these principles apply equally to a workation approved at the employee’s request has not yet been conclusively determined. To avoid unexpected costs, employers may want to take clear precautions in advance. For example, the employer can take out supplemental insurance for the employees. Alternatively, employers may want to make approval of the workation conditional on the employee providing proof of adequate insurance coverage.

Immigration Law

Depending on the location of work (especially outside the EU), immigration law may be relevant. For example, the employee may need to apply for a work permit.

Key Takeaways

Even though workation may seem straightforward from the employee’s perspective, it presents a range of legal and organizational challenges for employers. However, with sufficient lead time and a well-thought-out organizational and contractual framework that includes the following considerations, these obstacles can be effectively managed:

• Establishing a framework in advance—through policies, supplemental agreements to the employment contract, or works council agreements.
• In companies with a works council, an agreement with the works council, as most provisions are subject to co-determination under Section 87 of the Works Constitution Act (Betriebsverfassungsgesetz (BetrVG)), in particular No. 14.
• Limiting workation to EU countries where possible, as additional immigration hurdles may arise in non-EU countries.
• Restricting the duration and frequency to keep organizational effort and legal risks low.
• Preventing unauthorized workation without the employer’s knowledge.
• Reviewing tax implications separately.

Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Germany blog as additional information becomes available.

Kerstin Swoboda is a senior associate in the Munich office of Ogletree Deakins.

Niklas Thiel, a law clerk in the Munich office of Ogletree Deakins, contributed to this article.

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Quick Hits

• Virginia has enacted laws prohibiting certain noncompete agreements for healthcare professionals and restricting the enforceability of noncompete agreements for discharged employees.
• HB1 and SB1 establish a multiyear schedule to increase Virginia’s minimum wage to $15 per hour by January 1, 2028, with further adjustments based on the Consumer Price Index starting in 2029.
• SB790 introduces health insurance coverage for menopause and perimenopause symptoms.

Limitations on Noncompete Agreements for Discharged Employees (SB170)

Governor Spanberger recently signed into law Senate Bill (SB) 170 (Chapter 883), which prohibits an employer from enforcing a noncompete covenant with an employee who is discharged and not offered severance, unless the employer discharged the employee for cause. Virginia’s preexisting limitations on the use of noncompete agreements with so-called “low-wage” workers remain.

Ogletree Deakins’ article, “Virginia Further Limits Noncompete Agreements,” specifically covers Virginia’s latest restrictions on noncompete agreements for discharged employees in detail.

Prohibited and Exempted Health Care Noncompete Agreements (SB128)

Newly enacted SB 128 (Chapter 1114) broadens the existing ban on “low-wage” covenants not to compete to include all “health care professionals.” Current Virginia law restricts noncompete agreements only for low-wage employees or those classified as nonexempt under the Fair Labor Standards Act (FLSA). The law now prohibits employers from entering into,enforcing,or threatening to enforce such agreements with any low-wage employee or health care professional (i.e., “any person licensed, registered, or certified by the Board[s] of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work”).

The law, however, exempts the following:

• “[n]ondisclosure agreements intended to prohibit the taking, misappropriating, threatening to misappropriate, or sharing of certain information to which an employee has access,” such as trade secrets and proprietary or confidential information;
• noncompetition or “similarly restrictive covenants with any health care professional or such person’s business entity as part of a sale of business,” provided the restriction is “reasonable in scope, duration, and geographic area”;
• “provisions in employment agreements, through a promissory note or otherwise, that require repayment for all or a prorated portion of recruitment-related costs, including relocation expenses, signing or retention bonuses, and other remuneration provided to induce relocation or establishment of a practice in a specified geographic area, as well as recruiting, education, or training expenses from a departing health care professional who has been employed for fewer than five years”; and
• “provisions in employment agreements requiring a [departing] health care professional, for the benefit of an employer and for a stated period of time … to refrain from soliciting or attempting to solicit, directly or by assisting others, any business from any of [the] employer’s customers, including actively seeking prospective customers, with whom the [departing health care professional] had material contact during his [or her] employment, for purposes of providing products and services that are the same [as] or substantially similar to those provided by the employer.”

Newly enacted SB128 authorizes a low-wage employee or health care professional to bring a civil action to void any violative agreement and to recover liquidated damages, lost compensation, damages, and reasonable attorneys’ fees and costs, in addition to the $10,000 civil penalty already in place under the law for each violation.

SB128 takes effect on July 1, 2026.

Minimum Wage Increases (HB1 and SB1)

While Virginia’s minimum wage rate currently sits at $12.77 per hour following recent inflation adjustments, House Bill (HB)1/SB1 (Chapters 350 and 351) establish a multiyear schedule for further increases. Specifically, the law now mandates the following schedule for all Virginia employers:

• $13.75 per hour, effective January 1, 2027
• $15.00 per hour, effective January 1, 2028

Effective January 1, 2029, Virginia employers will be required to pay a minimum wage adjusted annually by reference to the Consumer Price Index published by the U.S. Department of Labor’s Bureau of Labor Statistics.

Salary History and Pay Transparency (HB636 and SB215)

Virginia has enacted legislation further regulating the considerations Virginia employers may take into account when setting pay. Specifically, HB636/SB215 (Chapters 1063 and 996) prohibit covered employers from (1) seeking or requiring a prospective employee’s wage or salary history or (2) relying on prior pay information when setting pay or making hiring decisions. The law includes a narrow exception that permits prospective employees to voluntarily disclose wage or salary histories, but only after receiving offers of employment containing initial compensation offers. In such instances, a wage or salary history may be used only to support or confirm a wage or salary higher than the initial offer.

Also, like several states with similar provisions, Virginia’s law requires that public or internal job postings—including those for promotions or transfers—include specific wage or salary ranges. Relatedly, all wage or salary ranges must be set in “good faith” and in consideration of the breadth of such ranges.

Aggrieved employees may now pursue individual actions for alleged violations. The new law also authorizes the Office of the Attorney General of Virginia to enforce these provisions with successful actions carrying statutory damages of between $1,000 and $5,000. Job posting–related claims are subject to a fifteen-day notice-and-cure requirement before an action may be brought, allowing an employer to fix an issue if adequately brought to its attention. As stipulated in the statute, claims must be filed within one year.

These requirements take effect on July 1, 2026.

Paystub Recordkeeping Requirement (HB238)

Effective July 1, 2026, pursuant to enacted HB238 (Chapter 1040), employers must retain employee paystubs or online accounting for at least three years after the work is performed.

Volunteer Emergency Responder Leave (SB100)

Under enacted SB 100 (Chapter 330), Virginia law will prohibit employers from discharging or otherwise retaliating against employees who are absent from work because they are serving as volunteer emergency responders actively responding to emergency alarms or serving during states of emergency. To take this new emergency responder leave, an employee will need to provide his or her employer with a notice of intent to render emergency services at least one hour before the employee is scheduled to work, and, upon returning to work, provide the employer with an incident report and an official certification that the employee was responding to an emergency situation. Employers are not required to pay employees who use this time, though employees may use paid leave for their volunteer emergency response absences.

This change becomes effective on July 1, 2026.

Paid Sick Leave (SB199) and Paid Family and Medical Leave (SB2)

Virginia recently enacted a paid sick leave law (SB 199 and Chapter 1129) as well as an expanded paid family and medical leave entitlement (SB 2 and Chapter 981). Virginia’s new paid sick leave law will provide coverage to all public and private employees in the Commonwealth. The paid sick leave entitlement will accrue at a rate of one hour for every thirty hours worked, with an annual cap of forty hours. For employers with at least fifty employees, paid sick leave coverage will commence on July 1, 2027, with delayed implementation for smaller employers.

Meanwhile, Virginia’s paid family and medical leave law establishes a payroll-funded insurance program that provides qualifying employees with up to twelve weeks of paid leave for family and medical reasons at 80 percent of the employee’s average weekly wage, subject to a maximum weekly benefit cap set at 100 percent of the statewide average weekly wage. This leave can then be used for a number of qualifying family- and medical-related reasons. The program will be administered by the Virginia Employment Commission, which will set the contribution amounts on October 1, 2027. The program will officially begin collecting contributions on April 1, 2028, and begin benefit payouts on December 1, 2028.

Ogletree Deakins’ article, “Virginia Expands Provisions for Paid Sick Leave and Paid Family and Medical Leave,” specifically covering Virginia’s new paid leave laws, contains more details about both laws.

Virginia Human Rights Act Expansion (SB637)

SB637 (Chapter 950) expands the statute of limitations for Virginia Human Rights Act (VHRA) claims and redefines “employer” to include small businesses. Previously, the VHRA applied mostly to employers with fifteen or more employees. SB637 expands this coverage to employers with five or more employees.

Additionally, SB637 modifies the former 300-day limitations period to permit written complaints filed with the Office of Civil Rights within two years from the date of the alleged discriminatory practice.

This expansion takes effect on July 1, 2026.

Insurance Coverage for Menopause and Perimenopause Symptoms (SB790)

Governor Spanberger signed SB790 (Chapter 955) into law, adding health insurance regulations covering menopause as a protected condition. SB790 introduces new mandates for health insurance coverage and requires health insurers to provide coverage for “medically necessary” treatments for menopause and perimenopause symptoms, such as hot flashes, bone density loss, and sleep disruptions. The insurance mandates of SB790 apply to policies issued or renewed on or after January 1, 2027, though they do not apply to self-insured plans.

In a similar vein, Governor Spanberger vetoed bills (HB1173/SB258) that would have explicitly amended the VHRA to include “menopause or perimenopause” as a protected characteristic, thereby prohibiting employers from discriminating against employees based on these conditions. The governor explained in her official veto statement that these conditions were already protected by prohibitions against discrimination on the basis of age and sex.

Au Pair Exemption (SB28)

SB28 (Chapter 983) expands Virginia’s overtime requirements to include domestic workers, such as housekeepers and nannies. The Virginia General Assembly accepted Governor Spanberger’s recommendation to move the effective date from July 1, 2027, to July 1, 2028. Additionally, SB28 will not become effective unless reenacted by the 2027 General Session.

Staying Informed

Ogletree Deakins’ Richmond office will continue to monitor developments and will provide updates on the Healthcare, Leaves of Absence, Pay Equity, Unfair Competition and Trade Secrets, Virginia, and Wage and Hour blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal covers legal developments in state Pay Transparency laws, Salary History Bans, Leaves (including Paid Sick Leave,  Family and Medical Leave, and Volunteer Emergency Responder Leave), and Minimum Wage laws—including the newly enacted Virginia laws. Premium-level subscribers have access to comprehensive updated law summaries and policies; Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.

J. Clay Rollins is a shareholder in the Richmond office of Ogletree Deakins.

Sebastian L. Brana is an associate in the Richmond office of Ogletree Deakins.

Sam Sylvester, an administrative assistant in the Richmond office of Ogletree Deakins, contributed to this article.

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Quick Hits

• Virginia Governor Spanberger has signed legislation that expands paid sick leave to all public and private employees.
• The paid sick leave legislation mandates one hour of paid sick leave for every thirty hours worked, with an annual accrual and use cap of forty hours, and includes provisions that could create challenges for employers, including very loose requirements on the notice employees must give before taking leave.
• The paid family and medical leave law establishes a payroll-funded insurance program, providing qualifying employees with up to twelve weeks of paid leave at 80 percent of their average weekly wage, with contributions split between employers and employees.

Paid Sick Leave

After back-and-forth amendments between the legislature and Governor Spanberger, the Commonwealth of Virginia has enacted a paid sick leave law (House Bill (HB) 5/Senate Bill (SB) 199; Chapters 1128 and 1129) that provides coverage to all public and private employees in the Commonwealth—an entitlement that was previously limited only to home-health workers. The law requires employers to provide employees with one hour of paid sick leave for every thirty hours worked, with an annual accrual cap of forty hours, all of which can be used within the year or carried over to the next (though annual use of paid sick leave is capped at forty hours). The law applies to all employers, regardless of size, subject to a phased implementation schedule. Paid sick leave obligations under the law commence on July 1, 2027, for employers with fifty or more employees; on January 1, 2028, for employers with between twenty-five and forty-nine employees; and on January 1, 2029, for employers with between one and twenty-four employees.

Beyond standard medical needs for the employee or employee’s family member, the law allows victims of domestic abuse, sexual assault, or stalking to use paid sick leave to relocate, obtain medical care or counseling, seek legal advice, or utilize other victim aid services. Notably, this “safe leave” can also be used if the employee’s family member is a victim.

The law contains numerous provisions that could create headaches for employers, including:

• Notice requirements are significantly limited. Employees are able to make requests in nearly any form, including verbally, and need only include anticipated duration “when possible.” The legislation allows employers to require notice of the need for sick leave, but only pursuant to a written policy that had been previously distributed to the employee seeking leave. Correspondingly, employees are required to “make a good faith effort” to provide notice and minimize disruptions where the need for leave is foreseeable.
• The law prohibits employers from requiring “disclosure of details of health information about an employee or an employee’s family member or details of domestic violence, sexual assault, or stalking as a condition of providing paid sick leave under this article.” (Emphasis added).
  • However, paid sick leave of three or more days triggers a loosening of these restrictions, and permits an employer to require “reasonable documentation,” including a note from a treating medical provider.
  • Read together, these provisions indicate that sick leave of fewer than three days in duration is not subject to verification.
• The legislation also requires transfer of accrued leave when employees are transferred within an employer’s divisions or locations, and requires that employees be allowed to retain accrued sick leave through a change in ownership if the employer’s business is acquired by a different employer.
• The law provides no blanket carveout for employers with existing paid leave policies or collective bargaining agreements. Rather, only employers with policies or collective bargaining agreements that provide “an employee an amount of paid leave sufficient to meet the requirements of this section and that may be used for the same purposes and under the same conditions” are excused from providing additional leave.
• The law also defines “family member” broadly, including “any other individual related by blood or affinity whose close association with an employee is the equivalent of a family relationship.”

The law also brings new potential liability risks. It expressly permits a private right of action and requires a court to award a successful employee with twice the amount of any uncompensated leave, among other remedies. An aggrieved employee also has the option to file a charge with the Virginia commissioner of labor and industry, and the commissioner has the power to investigate and issue up to $500 in fines for each violation.

Paid Family and Medical Leave

With her signature, Governor Spanberger has also enacted legislation (HB1207/SB2 and Chapters 1093 and 981) providing a statewide Paid Family and Medical Leave entitlement. The law establishes a payroll-funded insurance program that provides qualifying employees with up to twelve weeks of paid leave for family and medical reasons at 80 percent of the employee’s average weekly wage, subject to a maximum weekly benefit cap set at 100 percent of the statewide average weekly wage. Paid Family and Medical Leave may be used for various qualifying family- and medical-related reasons, including:

• Bonding with a new child during the first year after the child’s birth, adoption, or foster placement;
• Care of a family member with a serious health condition;
• The employee’s own serious health condition;
• Care for a covered service member who is the employee’s next of kin or other family member;
• Attending to a qualifying exigency when a family member is on active duty, or has been notified of an impending call or order to active duty, in the Armed Forces; and
• Seeking safety services for the employee or a family member (up to 4 weeks of PFML benefits available for this purpose)

The program will be administered by the Virginia Employment Commission (which principally administers unemployment benefits), and will be funded by payroll contributions split between employers and employees. Under the funding structure, employers with eleven or more employees must pay at least 50 percent of the total required contribution amount into the Fund, and may deduct 50 percent from employees’ paychecks. Meanwhile, employers with ten or fewer employees are not required to pay the employer portion of the premiums. The amount of these contributions will be determined by the Virginia Employment Commission on October 1, 2027, and annually thereafter by October 1. That said, the fiscal impact statement accompanying the bill suggested that contributions of approximately 0.75 percent of total wages would be necessary to sustain the program, with increases likely required over time.

The law further specifies that leave may be taken intermittently and is job-protected, ensuring employees can return to their same or an equivalent position and that the employees retain pay, seniority, and benefits, including fringe benefits. This paid leave runs concurrently with other leave entitlements, such as federal Family and Medical Leave Act (FMLA) leave, or leave under a collective bargaining agreement. For employers that prefer to manage their own benefits, the law provides a provision for private plan “opt-outs,” which allows businesses to utilize a commission-approved private insurance plan if it provides benefits equal to or greater than the state program and does not cost the employee more than it would under the state plan.

The law also specifies that this paid leave cannot be waived by agreement, including by collective bargaining agreement. Furthermore, it specifies that no collective bargaining agreement entered into or renewed after January 1, 2027, may “diminish” any employee’s right to paid leave.

The program will officially begin collecting contributions on April 1, 2028, and begin benefit payouts on December 1, 2028.

Staying Informed

Ogletree Deakins’ Richmond office will continue to monitor developments and will provide updates on the Healthcare, Leaves of Absence, Pay Equity, Unfair Competition and Trade Secrets, Virginia, and Wage and Hour blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state paid sick leave and family and medical leave laws, including the newly enacted laws in Virginia. Premium-level subscribers have access to comprehensive law summaries and updated policies; Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.

J. Clay Rollins is a shareholder in the Richmond office of Ogletree Deakins.

Sebastian L. Brana is an associate in the Richmond office of Ogletree Deakins.

Sam Sylvester, an administrative assistant in the Richmond office of Ogletree Deakins, contributed to this article.

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