---
title: Mid-Year HR & Payroll Compliance Update
description: Virginia and Maryland employers must prepare for significant HR and payroll changes, including pay transparency laws and minimum wage increases, effective July 1, 2026.
---

[BE Informed ](https://blog.becpas.com)

# [Mid-Year HR & Payroll Compliance Update](https://blog.becpas.com/mid-year-hr-payroll-compliance-update)

 Written by [Debbie Moeller](https://blog.becpas.com/author/debbie-moeller) | Jun 26, 2026 2:36:54 PM

## **Virginia & Maryland Employers: What to Know for July 1, 2026, and Beyond**

As we passed the July 1 legislative cycle, employers in Virginia and Maryland face significant HR and payroll changes that will impact hiring practices, compensation strategies, and compliance requirements.

Below is a practical summary of the most important developments—and what your organization should be doing now.

## **Virginia: Significant Changes to Pay Practices & Compliance**

Virginia’s 2026 legislative session introduced sweeping reforms affecting pay transparency, wage enforcement, and compensation planning.

#### **Pay Transparency & Hiring Requirements **

**(SB 215 and HB 636 Effective July 1, 2026)**

- Salary/wage ranges must be included in all job postings.
- Employers cannot request or rely on salary history.
- Anti-retaliation protections apply to applicants.

**What does this mean: **Job postings must be aligned with actual compensation practices and payroll data. Failure to comply could lead to penalties or claims.

#### **Virginia Minimum Wage Increases (HB1 Effective 2026–2028)**

Virginia has approved a phased increase to $15/hour:

- **$12.77/hour**– effective January 1, 2026
- **$13.75/hour**– effective January 1, 2027
- **$15.00/hour**– effective January 1, 2028
- Automatic inflation-based increases begin in 2029.

**What does this mean: **Employers should begin multi-year budgeting now, as increases will lead to wage compression and higher payroll costs.

#### **Expanded Wage Definitions & Enforcement** (HB 238 Effective July 1, 2026)

- Virginia expands the definition of “wages” to cover hourly wages, salaries, overtime, tips, bonuses, commissions, piece rates, day rates, and prevailing wages.
- Increased ability for employees to recover damages and penalties.

**What does this mean: **Compensation structures (especially incentives and commissions) should be reviewed for compliance.

#### **Non-Compete Restrictions (SB 170 and HB 627 For agreements entered into, renewed, or amended after July 1, 2026)**

- Non-competes are unenforceable without severance if an employee is terminated without cause.
- Non-competes are prohibited for defined healthcare professionals.

**What does this mean: **Employers must update offer letters, contracts, and termination practices.

#### **Forward Looking: Paid Leave Expansion (HB 5 and SB 199)**

- Paid sick leave phases in beginning July 1, 2027, for employers with 50 or more employees, with a phased-in coverage in 2028 and 2029 for smaller employers.
- State paid family and medical leave (PFML) program planned (payroll-funded) with premium rates to be set by October 1, 2027, premium contributions to begin April 1, 2028, and benefits to become available December 1, 2028

**What does this mean: **Employers should begin preparing payroll systems for leave tracking and future payroll deductions.

## **Maryland: Ongoing Wage Complexity & Upcoming Payroll Changes**

Maryland continues to require careful compliance due to state and local wage differences and upcoming payroll-based leave programs.

#### **Minimum Wage: State vs. Local Rates**

- Statewide minimum wage remains $15.00/hour.

However, local rates are increasing:

- Montgomery County: (Effective July 1, 2026) (Montgomery County Office of Human Rights) 
    - $18.00 for large employers
    - $16.50 for mid-sized employers
    - $15.95 for small employers

- Howard County: (Effective July 1, 2026) (Howard County CB82-2021) 
    - $16.00 for smaller employers and certain categories covered, in line with the rate already applicable to larger employers

**What does this mean: **Employers must track employee work locations to ensure compliance with local wage requirements.

#### **Pay Transparency **

**(Ongoing Requirement since October 1, 2024, MD SB 525)**

- Wage ranges and benefits must be included in job postings.

**What does this mean: **Multi-state employers should ensure consistency between Virginia and Maryland postings.

#### **Paid Family & Medical Leave (FAMLI)** (MD HB 102)

- Payroll contributions begin January 1, 2027
- Estimated contribution rate: approximately 0.90% of wages (shared employer/employee)

**What does this mean: **Employers should begin preparing for new payroll withholdings and employer contributions.

#### **Key Takeaways**

- Virginia is rapidly increasing regulations around pay transparency plus wage compliance.
- Maryland continues to add complexity with local wage variations and upcoming payroll taxes.
- Payroll systems and compensation data are now central to compliance.

#### **Action Checklist**

- Update job postings to include compliant pay ranges (Virginia and Maryland)
- Model Virginia minimum wage increases through 2028.
- Review compensation plans (bonuses, commissions, incentives)
- Update employment agreements and non-compete provisions (Virginia)
- Track employee work locations for proper wage rates (Maryland)
- Begin preparing for paid leave payroll contributions (2027+)

## **How We Can Help**

Our team is actively engaged in helping clients navigate these changes, including:

- Compensation and pay transparency audits.
- Multi-state payroll compliance reviews
- Policy and agreement updates
- Payroll system readiness for upcoming leave programs.

If you have questions about how these changes affect your organization, please contact your Brown Edwards advisor.

*This communication is for informational purposes only and should not be considered legal advice.*

 

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