Paid Leave Impacts on Small Business

Paid leave legislation is moving in the General Assembly this session — and it is likely to advance in some form. Two sets of companion bills are under consideration:

HB5 / SB199 – Paid sick leave mandate requiring 1 hour of leave for every 30 hours worked
HB1207 / SB2 – State-run paid leave insurance program funded through payroll contributions

These proposals would directly impact payroll costs, administrative responsibilities, and long-term financial forecasting for small businesses across Virginia. Read more about all four paid leave bills here.

To help you understand what this could mean for your business, we developed impact modeling tools that calculate:

Direct payroll cost increases
Insurance premium contributions
Margin and net profit compression
Estimated impact on employee paychecks

In many cases, the paid leave mandate alone represents an effective 3.6–3.7% payroll increase once employer taxes are included. When layered on top of scheduled minimum wage increases, rising health insurance premiums, escalating commercial rents, and other compliance costs, the cumulative burden becomes significant.The Paid Leave insurance program (HB1207 / SB2) introduces additional uncertainty. While the current estimated rate is 0 .72%, the rate would be recalculated annually based on program solvency, with no statutory cap for employer contributions. Businesses are being asked to commit to a program without long-term cost predictability.

We need lawmakers to hear directly from business owners about:

The compounded impact of layered mandates
The burden on businesses already offering paid leave
The uncertainty created by variable premium rates
The administrative complexity of implementation

This is not theoretical — your numbers matter.

We are asking you to:

Use the cost estimator tool to calculate your projected impact. Paid Leave Accural Cost Estimator | Paid Leave Insurance Program Cost Estimator
Send the pre-drafted message to General Assembly leadership, the Secretary of Labor, and the bill patrons.
Personalize it with your specific cost projections. You will be prompted with questions to answer these.

The structure of the final legislation will depend on whether lawmakers understand how it affects real businesses. Your voice is critical. Thank you for standing up for Virginia’s small business community.

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What's your district & how can legislators reach you?

Tell us about yourself

Your Message to the legislators

Dear (name and title inserted automatically),

I am writing as a Virginia small business owner regarding HB5/SB199 (paid sick leave mandate) and HB1207/SB2 (paid leave insurance program).

After reviewing the current bill language, I used an impact modeling tool to calculate how these proposals would affect my business.

Under HB5/SB199, the paid leave mandate would result in approximately:
•	$[Insert Mandate Cost] in additional annual payroll expense
•	A reduction of approximately [Insert %] of my current net profit

Under HB1207/SB2, the paid leave insurance premium contribution at the current estimated rate of 0.72% would result in:
•	$[Insert Insurance Cost] in annual payroll contributions
•	Additional financial exposure due to the variable rate structure

While I support policies that help workers, I am concerned about several aspects of these bills:
1.	Compounded Costs - These mandates do not exist in isolation. Small businesses are simultaneously managing scheduled minimum wage increases, rising health insurance premiums, escalating rent, and other regulatory costs. Layering additional payroll mandates compresses already thin margins. All in our costs would be 
2.	Penalizing Responsible Employers - Many small businesses already offer paid leave or PTO. The current structure may require restructuring existing benefit packages and implementing duplicative tracking systems rather than recognizing existing policies.
3.	Cost Uncertainty - The paid leave insurance program rate would be recalculated annually based on program solvency, with no clear cap on employer contributions. This creates significant difficulty in forecasting long-term labor costs.
4.	Administrative Burden - Tracking accrual, compliance, reporting requirements, and payroll adjustments adds ongoing operational costs for small businesses without dedicated HR departments.

I respectfully urge you to consider amendments that would:
•	Allow existing PTO policies to satisfy compliance requirements 
•	Provide clear caps or cost predictability within the insurance program
•	Recognize the impact on businesses with significant part-time or seasonal workforces
•	Reduce administrative complexity

Supporting workers and sustaining small businesses are not mutually exclusive goals. I ask that the final legislation reflect the operational realities faced by small employers.

Thank you for your consideration.