Virginia Employment Law Update + Key 2025 Supreme Court Rulings Employers Must Know

Effective July 1, 2025, Virginia will implement several new labor and employment laws into Virginia Code. Additionally, major U.S. Supreme Court decisions in 2025 are reshaping the legal landscape for employers nationwide.

This article summarizes both the Virginia Code updates and recent federal Supreme Court rulings that every employer and HR professional should know.

Virginia Employment Law Changes – Effective July 1, 2025

SB 1218 – Expansion of Non-Compete Agreement Restrictions

Virginia’s existing restrictions on non-compete agreements for low-wage employees are now broadened. Under this new law:

• The definition of “low-wage employee” now includes any employee entitled to overtime pay (all non-exempt employees) under the Fair Labor Standards Act (FLSA)—regardless of their total weekly earnings.
• Employers found in violation are subject to a civil penalty of $10,000 per violation.

What this means for employers: This change greatly expands the number of employees who cannot be subject to non-compete agreements. Review all restrictive covenants in employment contracts and ensure they are compliant. Misapplication could lead to significant penalties.

HB 1730 – Employer Liability for Injuries to Vulnerable Victims

This legislation expands civil liability for employers in cases where employees cause personal injury or wrongful death to a “vulnerable victim.” A vulnerable victim is defined in the statute, and the law lays out specific criteria for determining vicarious liability, including:

• Whether the employee was likely to come into contact with vulnerable individuals as part of their job;
• The employer’s failure to exercise reasonable care in supervising or hiring the employee.

What this means for employers: You must assess your hiring practices, supervision protocols, and the potential for employees to interact with at-risk populations. Employers could face liability even if they are not directly at fault, based on foreseeability and negligence in oversight.

HB 1766 / SB 1056– Increase in Unemployment Compensation Benefits

Starting January 1, 2026, unemployment benefits will increase by $52 per week for eligible individuals. In addition, the law directs the Commission on Unemployment Compensation, in partnership with the Virginia Employment Commission, to study the feasibility of annual adjustments to benefit amounts based on changes in the average weekly wage.

What this means for employers: This may eventually lead to higher unemployment insurance taxes to support increased benefits. Businesses should prepare for a potential rise in their unemployment insurance obligations.

HB 2401 / SB 998 – Child Labor Protections for Content Creators

In response to the growing trend of children appearing in monetized online content, this law requires compensation and protections for minors under age 16 who appear in digital content:

• A portion of earnings derived from such content must be placed in a trust account for the child.
• The content creator must maintain specific records and share them with the child and trustee.
• The child (or their guardian) has the right to enforce the law in civil court.

What this means for employers and creators: Those who monetize videos featuring minors must treat these children as compensated participants and comply with trust account and documentation obligations. This may particularly affect influencer marketing firms, family vloggers, and entertainment companies.

U.S. Supreme Court Employment Law Rulings – 2025

In addition to Virginia’s legislative changes, three significant 2025 U.S. Supreme Court decisions now shape how federal employment laws are interpreted:

Ames v. Ohio Department of Youth Services, 145 S. Ct. 1540 (2025)

Facts: Marlean Ames, a heterosexual woman, alleged reverse discrimination after being denied promotion and demoted. Lower courts dismissed her claim for failing to show “background circumstances” suggesting bias.

Holding: The Supreme Court unanimously struck down the “background circumstances” requirement, which had forced majority group members to meet a higher evidentiary standard when alleging workplace discrimination. The ruling clarifies that discrimination protections apply equally to all employees, regardless of majority or minority status.

Significance: This case removes the higher burden for “Reverse Discrimination” Claims that some courts had used. Now, all Title VII plaintiffs—regardless of group status—must meet the same standard for discrimination claims. Employers can no longer argue that majority-group plaintiffs need to show special circumstances to proceed. Employers should ensure all workplace policies and practices are applied fairly and consistently. This decision is expected to lead to an increase in claims from employees who historically may have been viewed as less likely to face discrimination.

Stanley v. City of Sanford, No. 23-997, 2025 U.S. LEXIS 2387 (June 20, 2025)

Facts: Karyn Stanley, forced to retire due to Parkinson’s disease, sued the City of Sanford for cutting her retiree health benefits. She alleged post-retirement disability discrimination.

Holding: In a 7–2 decision, the Court ruled Title I of the ADA applies only to current employees or job applicants—not retirees.

Significance: This ruling limits ADA protections after retirement and clarifies that to sue under Title I, a plaintiff must be a “qualified individual” seeking or holding a job. Retirees must now rely on other laws, such as ERISA, for post-employment benefit disputes.

E.M.D. Sales, Inc. v. Carrera, 145 S. Ct. 34 (2025)

Facts: EMD Sales is a food distributor in the D.C. area that employs sales reps to manage inventory and take orders at grocery stores. Some of these employees sued EMD, claiming they were wrongly denied overtime pay. While EMD admitted the workers worked more than 40 hours a week without overtime, the company argued they were exempt as “outside salespeople”—a defense the lower courts rejected, saying EMD hadn’t proven that exemption under the “clear and convincing evidence” standard.

Holding: The Court held that employers must prove FLSA exemptions by a preponderance of the evidence (i.e., more likely than not), not the higher, “clear and convincing evidence” standard.

✅ Significance: This decision aligns FLSA exemption cases with typical civil litigation standards and reverses several lower court rulings in the Fourth Circuit that had required a stricter burden of proof.

Final Thoughts: Navigating 2025 Labor & Employment Law

Employers face a rapidly evolving legal environment at both the state and federal level. From expanded liability under Virginia law to Supreme Court rulings redefining Title VII, ADA, and FLSA interpretations, the stakes are higher for compliance and legal strategy.

How VF&N Can Help:

• Audit non-compete and employment agreements
• Update all employment policies such as hiring, promotion, and disability policies
• Assess FLSA worker classification risks
• Advise digital creators on child labor compliance in Virginia
• Defend employers in discrimination and wage claims

Schedule a consultation with our employment law team today or call (703) 369-4738.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer