What You Need to Know about Virginia’s Paid Time Off Laws

Virginia Paid Time Off (PTO) Laws Explained

Virginia does not have any specific state statutes or laws governing the accrual or payment of paid time off or paid vacation. Virginia provides that unless there is an express employment contract, Virginia law will not require an employer to pay for any unused PTO or vacation upon termination from employment. Virginia employers are also not required to provide PTO to employees.
Virginia follows the general principle under federal law that employers are free to adopt and enforce any policies and rules they wish, as long as the rules do not otherwise violate federal laws or regulations .
Employers may create a plan, define the terms of the plan, and specify how the plan works to fit their individual needs while simultaneously avoiding negative tax consequences. Such plans may include a paid time off (PTO) policy, a vacation policy, or a vacation and sick leave policy.
One lack of state regulation of PTO or vacation is that it also leaves employees without recourse against employers. Federal law presents some protection for employees to receive payment for their unused PTO in certain circumstances, but state law is not as broad and provides less protection.

Virginia PTO Laws: Types of Paid Time Off

Virginia employers are not required to provide paid time off to employees for vacation, sick leave, or personal days. However, if an employer does offer these benefits, the employer must pay out all earned but unused paid time off at the time of termination of employment. This means, however, that employers can refuse to pay accrued but unused paid time off at termination if there is no written policy saying otherwise and if no paid time accrues by virtue of the passage of time alone (e.g., under a use-it-or-lose-it policy).
Some commonly offered forms of paid time off include:
Vacation
Vacation time is discretionary for Virginia employers. Virginia law, however, does require employers to carry over accrued vacation time indefinitely in the case a company has a written policy providing for the accumulation of vacation time. Employers cannot deny a terminated employee unused, accrued vacation time unless there is a written policy prior to termination.
Sick Leave
Virginia does not have any laws requiring employers to provide sick leave. If an employer offers sick leave to an employee, the employer may establish a minimum period that the employee must be take off before it will count as sick leave. Employers may also make additional requirements for an employee to qualify for sick leave and employees may only be allowed to use sick leave for absences due to the employee’s own illness, or that of an immediate family member.
If an employer offers accrued sick leave, and permits employees to use such time, the employer should adopt a clear policy on how the time will accrue and be used in order to avoid potential abuses. Employers should also plan for sick leave so that their business can operate effectively when employees take such leave.
Personal Days
When an employer offers personal days, they are typically treated similarly to vacation time. An employer can limit the number of times an employee can use personal days and the notice required for use. The only prohibition Virginia law places on personal days is that it prohibits employers from discriminating against employees who are absent from work for religious observances.

Paid Time Off Under Virginia Law: Employer Requirements

While employers in Virginia are not under any obligation to provide paid time off of any kind, if they choose to do so they must comply with both statutory and common law obligations. This includes providing specific pay for leave provided by contract or policy, and providing the correct amount of pay to an employee who separates employment.
Virginia law does not require employers to pay employees for any unused paid leave at termination. There is, however, a narrow exception for employer plans that provide for the payment for unused sick leave upon the employee’s separation from employment. Employers must pay an employee his or her unused paid time off, including vacation, at the time of separation from employment. Availability of such payment depends on specific applicable contract documents, such as employee handbooks or policies. Employers must pay the employee for the unpaid time off in a manner consistent with the relevant documents or governing practice. Employers are wise to ensure their time off policies and practices address the potential payment on separation issue. Virginia employers must maintain records for three years showing the dates, amounts, and all amounts of current and prior pay that an employee requests for all withheld unpaid wages.

Virginia Law and Paid Time Off: Employees’ Rights

Virginia law does not specifically require employers to provide paid vacation time, holiday pay, or any other type of paid time off. However, once an employer opts into an employment agreement that provides for such benefits, the employer’s policies regarding these benefits are generally enforceable under Virginia law. As is the case with many states, there are no general laws addressing the accrual of PTO, carryover or whether some payout is required upon termination.
As a result, the only entitlement related to PTO is whatever an employer defines in its internal policies and procedures. Accordingly, it is essential for an employer to be diligent about how PTO is articulated in employer policies or employment agreements. If a Virginia employer provides paid time off benefits, it should clearly define its expectations in its employee handbook or set forth in any individual employee contracts. Otherwise, Virginia’s interpretation of PTO policies strongly favors the employer, and it is unlikely that a court will require an employer to change a policy that is not clearly defined.

Recent Developments in Virginia Paid Time Off Law

Proposed changes to Virginia’s Paid Time Off ("PTO") laws make things look even worse for employers than they have in the past. With all of these changes taking place, now is the time to review PTO policies and make any necessary adjustments to comply with Virginia law.
The first of these two proposals is to impose identical rules and regulations on any type of small business with a second Virginia-specific law, aside from the existing law for businesses that have 50 or more employees. The second proposal is to increase the number of employees required to trigger the law from 50 to 60 to that of a large business that is not subject to the Family and Medical Leave Act.
If both of these proposals pass, which they likely will, it will essentially allow employees of a very small business to file suit for not having enough paid time off as any of their larger counterparts. The proposed increase in the number of employees required will likely change the landscape on whether larger businesses are likely to grant employees more paid time off, since 10 fewer employees would mean a reduction in size to guarantee that businesses don’t have to deal with these issues.
Aside from dealing with these changes, employers should be aware of the rulings that have occurred over the last couple of years .
The new laws, both enacted in 2021, codify decisions reached in federal courts deciding that vacation pay is a form of wages, even if not expressly included in the state statute, and therefore must be paid upon an employee’s termination. This means that if you do not have a PTO policy clearly describing the payout policy, you will be subject to Virginia’s new default payout rules.
These cases were the basis for the two most recent changes in Virginia. The first change made it clear that an employer’s policies regarding what happens to unused vacation/paid time off must be in writing and signed by the employee to be valid. The second change is a new law which provides that unless an employer states otherwise in writing, an employee is entitled to a cash payout of any accrued but unused vacation or paid time off upon an employee’s separation from employment.
While these laws may make it less favorable for businesses, it will be interesting to see how they progress through Virginia’s General Assembly. These proposed laws will also have to make their way past Governor Youngkin, who has been pushing back against laws that he believes hurt Virginia’s businesses.

Paid Time Off in Practice: Virginia Cases and Real Examples

To provide a clearer picture of how Virginia’s paid time off laws are applied, consider the following scenarios:
Scenario 1: An employee who has accrued paid time off due to working extra hours in the previous pay period uses some of that time off in the current pay period. The employer manages their records so that paid time off is used first from the previously accrued hours and remaining balance is then deducted from the current hours worked. This is an acceptable method of administration, pointing to the employee having a reduction in accrued paid time off and showing a natural order of offsets.
Scenario 2: An employee leaves their job in the middle of a pay period for personal reasons. They only work half of the workweek and receive their payment for half of the week’s work. The employer believes they are required by Virginia law to pay the employee for the remaining balance of the pay period and the following pay period. However, they have only accrued a few hours of PTO, and the employer doesn’t require the employee to pay back their wage advance, instead deducting the remaining balance from the PTO benefit. Virginia law does not require you to pay the employee for future work. Therefore, the employer could only deduct the missing hours from the PTO benefit and apply them to the time the employee missed in the current pay period and the next. Keep in mind that an employer must comply with any additional requirements that are required to take PTO in the company, or else the employer’s PTO clause may not be valid.
Scenario 3: An employer appears to handle break times according to the law and pays their employees well even while they are absent from work, employing a general seven-day workweek instead of an individual day of the week for a pay period. For example, they can fairly easily give employees the opportunity to take the day off – for any reason – on Tuesday, in order to extend a weekend without losing any salary. Since Virginia does not require purchase or management of a specific type of benefit, this is permissible.

Virginia Paid Time Off: Tips and Strategies for Employers and Employees

While it is important for both employees and employers to know of Virginia Code § 40.1-28.9:1, it is just as important for the parties to have a practical understanding of the Virginia paid time off laws.
First, if a terminated employee believes that he or she is entitled to pay for unpaid PTO, the employee must make a demand for the payment. The demand may be oral but must be oral with the intent to hold the employer to the obligation so it must be assertive. Demand for the payment also should be made in writing. The demand requires the employer to review its records and determine whether there is any money owed to the terminated employee. If the employer determines that there is no money owed, a letter to the employee from the employer with that information is effective and can be defended as an effort to comply with the statute.
Second, the employee needs to be proactive in the entire process. The list of items that can be paid as the final paycheck is the master list. The employee needs to check this list to see whether any amounts are unpaid. If so, the employee needs to follow the above steps to make a demand for payment.
Finally, we suggest that employers set up a pay periods that does not end on the day of termination. For example, if pay periods run the 12th through the 11th of each month, the employer will be able to pay the last paycheck on the pay day for the pay period in which the termination occurred. This does not eliminate all risks of claims arising under Virginia Code § 40.1-28.9:1 but this approach makes it the exception rather than the rule and provides for a longer transition period.

Virginia Paid Time Off Laws: Where to Find More Information

For additional information about Virginia laws and regulations relating to paid time off, visit the following sites:
The Virginia Department of Labor and Industry administers all laws concerning contributory and noncontributory programs, including the Virginia Unemployment Compensation Act , and the Virginia Occupational Safety & Health (VOSH) Program.
The U.S. Department of Labor’s Wage and Hour Division provides information on federal employment laws related to remuneration.
The Internal Revenue Service provides information on the federal regulations concerning how various benefits, including vacation pay and paid sick leave, are treated for tax purposes.