Getting familiar with the Virginia employee separation process is the key to fulfilling your employer obligations. Because employee termination laws can vary significantly, depending on the state, it’s important to know how Virginia’s laws differ.
This employee separation checklist and guide is an introduction to Virginia’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
Virginia Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Virginia
Virginia state law mandates that all separated employees must be paid all earned wages by the next scheduled payday. Employers are not required to pay out accrued and unused vacation time, unless that’s specified in the employee’s contract or company policy. While Virginia law does not dictate the method for delivering final wages, best practice is to use regular pay channels.
Employers who fail to pay wages on time may face significant penalties. These include payment of the unpaid wages, an additional amount equal to the wages owed, eight percent annual interest, and a civil penalty of up to $1,000 per violation. In more severe cases, failing to pay wages can result in a Class 6 felony, which is punishable by up to five years in prison.
2. Firing Employees in Virginia
Virginia is an at-will employment state, which means that firing employees is permissible for any legal reason. However, the state has two notice requirements. First, employers who provide a group health insurance plan and have fewer than 20 employees must notify separated employees of their right to continue coverage under Virginia’s state-level COBRA law. They must include the procedures and timeframes for obtaining continued coverage. The notice must be provided within 14 days of separation.
Second, employers must provide a “Notice to Workers” of their unemployment compensation benefits upon separation. This notice is available in English, Spanish, Amharic, Korean, Vietnamese, Arabic, and Chinese (simplified).
3. Severance Agreements in Virginia
If you plan to execute a severance agreement with separated employees, note these key considerations. First, you must explicitly list any claims the employee is releasing under federal and state law. Virginia state law claims that may be released include those under the Virginia Human Rights Act, Virginians with Disabilities Act, Virginia Equal Pay Act, Virginia Wage Payment Act, Virginia’s leave laws, and Virginia’s minimum wage and overtime laws. Make sure that any waivers only apply to claims that arose before the agreement’s effective date.
Virginia also has rules regarding non-disparagement clauses in severance agreements. These clauses can’t restrict employees from disclosing details relating to a claim or dispute of sexual harassment or sexual assault under federal law, tribal law, or Virginia Code §§ 18.2-61, 18.2-67.1, 18.2-67.3, or 18.2-67.4.
Finally, employers must also remember to review applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision restricts the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in Virginia
When separating from an employee with an Income Withholding for Support Order (“IWO”), promptly report the employee’s termination to the child support agency, court, or attorney that issued the IWO. You may register for online reporting with the Federal Office of Child Support Enforcement here.
You also may report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Virginia
If separating from your last Virginia employee has ended your in-state business operations, you can formally withdraw your state business registration. Depending on your organization’s legal structure, the forms you’ll need to submit to the Virginia Secretary of State may vary.
Both For-Profit Corporations and Non-Profit Corporations must file this Application for Certificate of Withdrawal, while Limited Liability Companies (LLCs) should complete this Certificate of Cancellation.
Stay Compliant with Virginia Employee Separation Requirements
Learning Virginia Employee Separation Agreement requirements helps employers ensure regulatory compliance and mitigate legal risk by recognizing employee rights.
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