Takeaways

• Effective 07.01.26, a new Virginia law significantly expands general contractor liability by imposing near-strict, joint and several liability for subcontractor wage violations.
• The law eliminates key protections, including the “knew or should have known” standard, and limits the effectiveness of indemnification and compliance certifications, while classifying general contractors as statutory “employers.”
• General contractors should consider strengthening oversight, auditing and contractual safeguards.

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Article

Beginning July 1, 2026, potential liability of general contractors in Virginia for unpaid wages will greatly expand under newly enacted House Bill 238. This represents a major shift in risk allocation in the construction industry, moving wage compliance responsibility upstream and increasing general contractors’ exposure even when violations originate with subcontractors.

Historically, Virginia law already imposed some degree of joint liability on general contractors for subcontractor wage violations. Since 2020, general contractors could be held jointly and severally liable for unpaid wages owed to subcontractor employees, but only if they “knew or should have known” about the wage violations. This knowledge requirement served as an important limitation, allowing contractors to rely on contractual protection, certifications, and reasonable oversight practices.

Removes Traditional Subcontractor Indemnity for Wages

The new legislation largely...

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