Easily manage employment in Virginia

Payroll management in Virginia

Virginia has a strong economy supported by industries such as technology, defense, healthcare, and finance. With state-specific payroll regulations, including a progressive state income tax, a rising minimum wage, and right-to-work laws, employers in Virginia must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in Virginia

Employers in Virginia must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: Virginia’s minimum wage is $12.00 per hour, with scheduled increases in future years.
• Overtime rules:
• Virginia follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply based on job classification and industry.

State income tax

• Virginia has a progressive state income tax system, with rates ranging from 2% to 5.75%, depending on income levels.
• Employers must withhold state income tax and remit it to the Virginia Department of Taxation.

Unemployment insurance (UI) tax

• Employers must contribute to Virginia’s Unemployment Insurance (UI) program, managed by the Virginia Employment Commission (VEC).
• The UI wage base in Virginia is $8,000.
• UI tax rates vary based on an employer’s experience rating and range from 0.1% to 6.2%.
• New employers typically pay a 2.5% UI tax rate.

Workers’ compensation

• Virginia law requires all employers with three or more employees to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Employers may obtain coverage through private insurance carriers or self-insurance programs.

Payroll tax filing and payment deadlines

• Employers must register for a Virginia Withholding Tax Account with the Virginia Department of Taxation.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Virginia Employment Commission (VEC).
• Payroll tax payments can be made electronically through the Virginia Department of Taxation’s online portal.

Quick facts: Important considerations for employers

• State minimum wage compliance: Virginia’s minimum wage is higher than the federal rate and is expected to increase in future years.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the Virginia New Hire Reporting Center within 20 days.
• Paid sick leave: Virginia requires certain healthcare and home care workers to receive paid sick leave, but private-sector employers are not mandated to provide it.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: Virginia is a right-to-work state, meaning employees cannot be required to join a union as a condition of employment.

Run payroll in Virginia with Remote

Managing payroll in Virginia requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.