The Employer’s 2024 Guide to Hiring Employees in Virginia

Feli Oliveros

Hiring employees is a huge milestone for any small business owner, but it’s also a decision that comes with many responsibilities. You must take into account federal and state employment laws, payroll taxes, employee benefits, and more. 

If you’re a new employer, read this guide for the six steps you should follow when hiring employees in Virginia.

Do your research

Before you kick off the hiring process, it’s important to understand the responsibilities and obligations you’ll have as an employer. 

The federal government has a number of guidelines employers must follow, while the Commonwealth of Virginia has its own as well. Some of the most important ones are described below. You’ll also want to check with your county and city officials for any additional requirements.

Determine whether you need employees or independent contractors

The first thing every prospective employer should do is determine whether they need employees or independent contractors. When you hire workers, it’s important to classify them correctly, as you’ll have different responsibilities depending on their classification. The state of Virginia also penalizes first-time offending businesses up to $1,000 for each misclassified worker. 

Use the guidelines from the Internal Revenue Service (IRS) to help you determine how your workers should be classified. If you need additional help, file Form SS-8 with the IRS to request clarification on the status of a worker. 

Understand your hiring costs and tax liability as an employer

If you decide hiring employees is the best route for your business, next, you’ll need to determine how much you should budget for each new hire. The Small Business Administration estimates that an employee costs a business about 1.25 to 1.4 times their salary to account for employment taxes, insurance coverage, benefits, training, and other related expenses. 

Below is a breakdown of the employment taxes you’ll be responsible for as an employer in Virginia: 

  • Employers withhold federal and state income taxes on behalf of their employees. The amount they withhold from each employee’s paycheck is based on the employee’s wages and withholding allowances.
  • Employers and employees pay their share of Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). The Social Security tax rate for employees and employers is 6.2%, and the Medicare tax rate is 1.45%.
  • The state unemployment insurance (SUI) tax rate for new employers in Virginia is 2.5%, plus add-on charges. In 2024, the SUI taxable wage base is $8,000.
  • Under the Federal Unemployment Tax Act (FUTA), employers pay 6% on the first $7,000 of each employee’s wages. Companies that pay their SUI taxes in full and on time receive a tax credit of up to 5.4% on their FUTA taxes. 

You can use Gusto’s hiring calculator to estimate how much it will cost your business to hire an employee.

Review Virginia labor laws

Because Virginia’s employment and labor laws generally favor employers, there are fewer regulations to consider compared to states like California or New York. Below are some of the most important ones to know if you plan on hiring employees in Virginia:

  • Minimum wage: Virginia’s minimum wage is $12 in 2024. Businesses with tipped employees must ensure these workers meet the minimum wage rate through their hourly rate plus earned tips, or else they will have to cover the difference.
  • At-will employment: Unless there’s an employment contract in place that states otherwise, employers and employees can terminate employment at any time and for any reason.
  • Leave: Employers must provide employees with unpaid jury duty, crime victim, court appearance, and military leave. Employers aren’t required to provide vacation leave to employees, but if they do, they need to follow the policies in their employee handbook. 
  • Pay equity: Companies must pay men and women equally for work performed under similar conditions. 
  • Discrimination: The Virginia Human Rights Act expands the protected classes established by federal law to prohibit discrimination based on expunged criminal records and non-conviction arrests, smoking tobacco, and lactation.
  • Child labor: There are many restrictions on the employment of workers under the age of 18. Businesses employing minors have different guidelines to follow, many of which depend on whether school is in session. You can find more information on these laws on the Office of the Attorney General’s website

Keep in mind that these laws can change frequently, so check with the US Department of Labor and the Virginia Department of Labor & Industry regularly for the most up-to-date information.

Take care of logistics

Prepare for your first employee by completing the tasks below. 

Get a federal employer identification number from the IRS

Every employer needs a federal employer identification number, or EIN, from the IRS. An EIN is a unique number assigned to every business. It is used on tax forms and other government documents—think of it as a Social Security number for businesses. 

If your business is structured as a partnership, multi-member limited liability company (LLC), C corporation, or S corporation, you probably already have an EIN, so you can skip this step. If you don’t have one, however, you can apply for one using the IRS online application

You can find more information on employer identification numbers on the IRS website.

Register with the state of Virginia

If you haven’t done so already, register with the Virginia Department of Taxation’s Tax Online Services for Businesses to receive your tax account number. You’ll automatically be registered with the Virginia Employment Commission for your state unemployment insurance taxes as well. 

If you already have a tax account number with the Department of Taxation, you can use the same online portal to register as a new employer in the state. 

Find workers’ compensation coverage

Workers’ compensation insurance covers an employee’s wages and medical bills if they get sick or injured on the job. Virginia law mandates that all employers with two or more employees are required to carry workers’ compensation. 

Many employers get coverage from an authorized insurance provider or professional employer organization, but you can self-insure your business if you get approval from the Virginia Workers’ Compensation Commission. 

Visit the Workers’ Compensation Commission website for more information. 

Get organized

Employers also have employment recordkeeping requirements—obligations to keep personnel files and other employment-related documents safe and accessible in case they’re requested during an audit. Generally, you should keep the following documents on file for each employee: 

  • Tax forms
  • Withholding agreements
  • Verification of eligibility to work
  • Hours worked
  • Wages paid
  • Pay statements
  • Benefits forms
  • Education and training history
  • Performance evaluations
  • Disciplinary records
  • Other agreements made between the employer and employee

You’ll also need to keep all employee personnel files for at least three years following the end of their employment with your company. Additional recordkeeping requirements can be found on the Equal Employment Opportunity Commission website

With all the paperwork you’ll need to keep for each employee, it’s important to set up an organizational system for your employment records. At this time, you should also gather anything else your new employee might need during the hiring and onboarding process: training documents, access cards, login information, uniforms, equipment, and so on. 

By preparing ahead of time, you’ll set your new hire up for success and ensure that the onboarding process goes smoothly. 

Prepare your business for hiring

Put together an employee handbook

In the Commonwealth of Virginia, employee handbooks (also known as employee manuals) aren’t required for businesses—but they’re crucial documents that every employer should consider providing to their new hires anyway. 

An employee handbook outlines an employer’s expectations, procedures, and responsibilities so their employees understand the inner workings of the organization. By laying out your official company policies, this document can help protect your business from employee complaints and lawsuits as well. 

The policies you include in your handbook depend on the type of business you run, the number of employees you have, and other factors. Below are some important ones to consider having in your employee manual:

  • Code of conduct 
  • Communication policy 
  • Employee learning and development
  • Employee benefits and compensation
  • Remote work policy
  • Rest and meal breaks
  • Time off and leave policy
  • Anti-discrimination policy
  • Disability and pregnancy accommodations
  • Pay transparency
  • Work hours

Also, make sure to collect a signed employee handbook acknowledgment form from each new hire after they receive their manual. This document confirms that the individual has received and read the handbook and that they understand the policies outlined in them.

Finally, keep in mind that your employee handbook will change to fit the needs of your business as it grows. Make sure to review the manual every year to ensure your policies are still relevant and up-to-date, and update them accordingly if needed. 

Prepare a compensation package

To attract and hire the best talent, you’ll need to put together a compensation package they won’t want to pass up. Use our blog post on creating a compensation plan as a guide for your own employee compensation packages.

For context, ZipRecruiter found that $60,401 is the average salary in Virginia, while $22 is the average hourly rate in the state. Although these averages will change depending on your industry and the role you’re hiring for, understanding the numbers can help put things in perspective as you create your compensation plans. 

If you plan on hiring full-time employees, take some time to think about the voluntary benefits you’ll offer as well. After all, competitive employee benefits can often be the determining factor for candidates deciding between two job offers. Some of the best employee benefits sought out by candidates today include: 

  • Health insurance
  • Retirement savings accounts
  • Remote work arrangements
  • Flexible schedules
  • Generous paid time off policies
  • Student loan assistance programs
  • Child care assistance
  • Professional development and training
  • Pet insurance

Once you’ve chosen your benefits offerings, follow Gusto’s step-by-step guide to setting up an employee benefits program at your small business. 

Advertise the job opening

Now you’re ready to promote the job opening and find your ideal candidate. At minimum, the following information should be included in your job post: 

  • Job title and description
  • Type of employee (full-time, part-time, seasonal, temporary)
  • Job location
  • Expected hours of work per week
  • Wage or salary range
  • Educational requirements, if applicable
  • Skills needed for the role

But to attract and hire top talent, it’s a best practice to disclose more information about your company and the role. For example, you may want to describe the qualities that set your business apart from your competitors, or list out what employee benefits you have to offer. 

When you’re done writing your job post, it’s time to get it in front of qualified job seekers. Publish it on websites like Glassdoor and Indeed—then consider promoting it in your community as well, especially if you’d prefer to hire someone local. College career centers and local hiring fairs can be great places to spread the word about open roles. 

Assess and interview top candidates 

As the job applications come in, review each one and offer interviews to the most promising candidates. Be mindful of each person’s time by keeping your interview process short and efficient, and by posing questions and exercises that help you uncover the information you need to make a hiring decision. 

Prepare ahead of time all your interview questions and any assessments you’d like applicants to complete. Follow the same process for each candidate you interview for the role. This way, you can easily compare each candidate’s overall performance against other applicants using the same criteria. 

Hire and onboard your first employee

Once you’ve found your ideal candidate, follow the steps below to ensure your business stays compliant with federal and state hiring guidelines. 

Send the offer letter

Many employers first extend job offers over the phone to confirm the candidate’s acceptance of the role and employment terms. After that, however, you’ll also want to send the candidate an official offer letter to get their acceptance in writing. 

Your offer letter should have the following details:

  • Job title
  • Duties and responsibilities of the position
  • Start date
  • Wage or salary details
  • Expected work hours
  • Outline of employee benefits, if applicable
  • Conditions of employment, if applicable
  • Onboarding requirements 

After the candidate signs the offer letter, keep a copy of it for your records. 

Conduct a background check

Before your new hire’s first day, you may decide to conduct a pre-employment background check as part of your due diligence. If you do, there are a handful of federal and state laws you’ll need to follow: 

  • Employers must notify candidates about their intent to conduct a pre-employment background check, and they must receive written permission from them before moving forward with it.
  • Employers can’t ask candidates about any arrests or convictions for possession of marijuana.
  • Companies can’t ask applicants to provide them with their social media account information if it’s not publicly available. Companies also can’t request to be added to an applicant’s social media contacts.
  • If an employer decides not to move forward with a candidate because of the results of a background check, they must notify the candidate, provide them with a copy of the report, and give them at least five business days to respond to the notice.

Depending on your municipality, you may have additional background check laws to adhere to. Check with your local government authorities for more information. 

Collect new hire forms from your employee

Federal and state law require employers to collect new hire paperwork from employees by their first day at work. These forms include:

  • IRS Form W-4: Determines how much in federal income taxes to withhold from your employee’s wages
  • Form VA-4: Helps assess your employee’s state income tax withholding liability
  • Form I-9: Verifies that the employee is eligible to work in the US
  • Voluntary Self-Identification of Disability form: Allows employees to voluntarily disclose any disabilities they might have (required for federal contractors and subcontractors)

The following documents aren’t required by law, but collecting these forms as part of the onboarding process is highly recommended:

  • Employment contract 
  • Employee personal data form, including the employee’s contact information, emergency contact information, and Social Security number
  • Employee handbook acknowledgement
  • Benefit enrollment forms, if applicable
  • Direct deposit form, if applicable

Report the new hire to the Virginia New Hire Reporting Center

Virginia employers must report all new hires to the state’s New Hire Reporting Center within 20 days of the employee’s start date. 

New hire reporting forms can be submitted online through the New Hire Reporting Center website, but businesses can also send reports by mail or fax instead. No matter which method you choose, you’ll need to submit the information below in each report: 

  • Business name and address
  • Business EIN
  • Employee’s name and address
  • Employee’s Social Security number
  • Employee’s start date

For more information on the state’s new hire reporting requirements, go to the Virginia New Hire Reporting Center website

Set up payroll

Employers also need to set up payroll to remain compliant with payroll tax laws and ensure their new employees get paid on time. Although some first-time employers choose to cut costs by running payroll manually, we recommend using payroll software or working with a payroll service provider because it’s easier and helps prevent you from making costly payroll mistakes. 

Once you’ve chosen a payroll system, use Gusto’s payroll guide to walk you through the setup process. If you’ve hired remote workers, our blog post on how to pay out-of-state employees may be helpful as well. 

Because setting up payroll can be confusing for new employers, consider working with your accountant to set up your system. They’ll be able to walk you through the payroll process, offer some tips and best practices, and answer any questions you have. 

Put up labor law posters and notices in the workplace 

Finally, employers in Virginia are required to display labor law posters in visible, high-traffic areas like the break room or kitchen to educate employees on their rights in the workplace. The posters and notices mandated by the federal government include: 

Below are additional posters required by the state of Virginia: 

Keep in mind that this isn’t a comprehensive list, as your company’s poster requirements are determined by your industry, business activities, number of employees, and other factors. Check with the US Department of Labor and the Virginia Employment Commission for the full list of poster requirements for your business. 

HR software designed with new employers in mind

Hiring your first employee can be a long process, filled with trial and error as you navigate the government’s employment regulations for the first time. 

But with Gusto’s all-in-one recruiting, hiring, and onboarding software, you can significantly decrease the time you spend finding and hiring your ideal candidate. Sync your account with your preferred hiring software so you can manage applicants all in one place, then give your new hires access to the tools they’ll need to succeed with just a few clicks. 

Learn how else Gusto simplifies the hiring and onboarding process by creating an account today. 

Feli Oliveros Feli Oliveros is a freelance finance and business writer with experience covering personal and small business finance. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.
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