A BILL to amend the Code of Virginia by adding in Article 1 of Chapter 3 of Title 40.1 a section numbered 40.1-28.7:12, relating to protection of employees; stay or pay contracts prohibited; civil penalty.
HB923 would prohibit most “stay or pay” employment contracts in Virginia. The bill defines these arrangements broadly to include agreements that require an employee to repay an employer, training provider, or debt collector when employment ends, or that impose fees, penalties, liquidated damages, or similar costs tied to quitting or termination. It also covers attempts to collect such debts after employment ends and bars employers from enforcing or threatening to enforce these provisions.
The bill creates several exceptions. It does not apply to government loan repayment or loan forgiveness programs, residential property financing or leases, bona fide apprenticeship or training programs recognized by state or federal agencies, certain tuition or credential-repayment agreements that are separately offered and limited to actual costs, or certain discretionary bonuses, relocation payments, or retention incentives if they meet detailed disclosure, repayment, and timing requirements. The bill would also authorize the Commissioner of Labor and Industry to adopt regulations to implement the law.
HB923 would add a new employee-protection section to Title 40.1 of the Code of Virginia and give workers a private right of action to challenge prohibited stay-or-pay provisions. Courts could void unlawful contracts, award liquidated damages, lost compensation, attorney fees, and other relief, and employers would be barred from retaliating against employees who sue. The Commissioner of Labor and Industry could assess a $1,000 civil penalty per violation and promulgate regulations. The law would apply only to contracts, covenants, or agreements entered into or renewed on or after July 1, 2026, affecting employers, training providers, debt collectors, and employees or prospective employees.
The bill appears to have had mixed but meaningful support in the legislative process. It advanced through earlier committee and House votes, including a favorable subcommittee recommendation and House passage, suggesting substantial backing for restricting coercive repayment provisions in employment contracts. However, it ultimately failed to report from Commerce and Labor on a 6-9 vote, indicating that enough members had concerns to stop the substitute version from advancing. Overall, the discussion history suggests support for worker protections, but not enough consensus on the bill’s scope and exceptions.
The main points of contention likely centered on how broadly the bill would restrict employer repayment arrangements and whether its exceptions were sufficiently clear and workable. Employers and training providers may have viewed the measure as limiting legitimate training, retention, relocation, and bonus agreements, while supporters likely argued that workers should not be trapped by debt-based penalties for leaving a job. The detailed carve-outs for apprenticeships, tuition reimbursement, and retention bonuses show an effort to preserve some employer incentives, but the final committee vote indicates disagreement over whether those exceptions adequately balanced labor protections with business flexibility.