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Virginia’s Paid Family Medical Leave Act
Would be Among the Most Expansive and Expensive in the Country
by Derrick A. Max
Governor Abigail Spanberger campaigned on a promise to sign “paid family and medical leave” when it reaches her desk. But popular vote-getting concepts often ignore the damaging impact such policies have once they are implemented. Virginia’s proposed paid family and medical leave program (SB2)/(HB1207) is a case study in how expansive design choices can turn a popular benefit idea into a long-term economic liability.
SB2 appears straightforward: a state-run insurance program providing up to 12 weeks of paid leave, funded through payroll contributions. Look closer, however, and the bill reveals a combination of unusually broad eligibility, weak gating mechanisms, near-universal employer obligations, and a built-in funding escalation clause that sets the stage for rising costs and growing burdens on employers -- particularly small businesses.
A Generously Designed Program, Ripe for Growing Utilization
SB2 offers wage replacement at 80 percent of a worker’s average weekly wage, capped at the state average weekly wage (a generous $1,463 in 2025). That provision places it among the most generous state PFML programs nationwide. Generosity does not stop with benefit levels.
SB2 defines “family member” far more broadly than do traditional leave laws, extending eligibility beyond spouses, parents, and children to now include grandparents, grandchildren, siblings, and “any individual whose close association with the covered individual is the equivalent of a family relationship.” That open-ended standard is inherently subjective and difficult to administer and is one of the broadest definitions being used.
SB2 also expands paid leave to include “safety services,” allowing paid time off for a wide range of activities related to domestic violence, sexual assault, stalking, or harassment, including relocation, legal proceedings, counseling, and security measures. Because of the complexity of determining eligible safety incidents, SB2 allows certification through a signed statement by the worker, reducing administrative friction, but increasing potential abuse.
Add to this the fact that SB2 includes military-related leave tied to deployment and care for a service member -- and it appears to cover nearly every conceivable leave scenario.
Near Instant Qualification for Coverage
SB2 has no meaningful tenure requirement before allowing coverage. Unlike the federal Family and Medical Leave Act (FMLA), which requires 12 months of tenure and 1,250 hours of service with an employer, SB2 contains no meaningful work-tenure requirement. Eligibility is largely tied to prior covered earnings and explicitly contemplates benefit calculations for workers employed for less than a year.
This makes SB2 more permissive than most other state programs. New York requires 26 consecutive weeks (or 175 days) with an employer before paid family leave can be used. Delaware requires 12 months and 1,250 hours. Even states that rely on earnings-based eligibility generally require a measurable base-period work history.
SB2’s approach allows paid leave to be accessed effectively from the first day of employment, shifting risk onto employers who may face extended absences before they have recouped the cost of hiring and training a worker.
Near-Universal Employer Participation Obligations
Under SB2 employers with 10 or fewer employees are not required to pay the employer share of payroll contributions. But even the smallest firms must withhold employee contributions, remit payments, provide notices, maintain records, coordinate leave, and guarantee job restoration. Unlike some states that fully exempt very small employers, SB2 spreads compliance obligations across firms both big and small.
The Hidden Cost SB2 Doesn’t Pay: Replacement Labor
The debate over paid leave ignores the real, off-the-books costs employers face when workers are absent. Supporters act as though the lost productivity of an employee on leave has no cost. While SB2 covers wage replacement, it does not pay for the employer’s cost of overtime, temporary staffing, training, or lost productivity to cover the work of an employee on leave.
In practice, employers cover absences in two ways: overtime for current staff (paying time and a half) or temporary replacements. Studies of absence management consistently find that these indirect costs can exceed the direct cost of payroll contributions, especially for small firms.
SB2 does nothing to mitigate these realities.
A Built-In Escalation Clause
Perhaps the most consequential difference between SB2 and Virginia’s prior paid leave proposal, House Bill 2531 (passed and vetoed in 2025 by Governor Youngkin) is SB2’s explicit funding escalation mechanism.
HB2531 did not codify a specific solvency threshold requiring automatic rate
adjustments. SB2, however, directs the Virginia Employment Commission to adjust contribution rates to ensure the trust fund maintains a minimum projected balance of 40 percent -- effectively guaranteeing that if utilization exceeds projections, payroll taxes will rise (and benefits will not be cut).
Out-of-control costs are not hypothetical. Other states offer cautionary examples. Washington state’s PFML program has faced repeated solvency concerns as utilization grew faster than expected, forcing lawmakers to raise premiums and consider general-fund backstops. Minnesota’s just launched program has already drawn scrutiny over cost projections and likely tax increases. Broad programs like those outlined in Virginia’s SB2 tend to cost much more over time than initially promised.
Learning the Wrong Lessons from Other States
Governor Spanberger argued that Virginia should “catch up” with states that already have paid leave but fails to learn the cautionary lessons those state plans reveal. Programs with broader leave definitions, higher replacement rates, weak eligibility gates, and expansive benefit structures are more likely to experience funding issues and cost significantly more over time.
Virginia’s own prior PFML studies have shown that program design -- who pays, who qualifies, how benefits are calculated -- has material effects on employment, wages, and economic output. SB2 largely ignores those cautions.
Conclusion
SB2 is a large, permanent expansion of state-mandated employment benefits, financed through payroll taxes and structured to grow. This bill is nothing short of a business killer.
Governor Spanberger should be cautious before committing to a program whose full costs -- especially to small businesses and workers’ wages -- are likely to emerge only after it is too late to reverse course.
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