Virginia Enacts Expansive Changes to Its Employment Laws
April 21, 2020
Virginia Governor Ralph Northam has recently signed numerous bills into law, many of which will have a significant impact on employers. While the extension of anti-discrimination protections to employees on the basis of sexual orientation and gender identity (previously reported on) has garnered the most media attention, Governor Northam also signed numerous other bills that provide additional protections against wage and hour violations, worker misclassification, and blanket use of non-compete agreements. Each of the signed bills will become effective on July 1, 2020.
Private Rights of Action for Wage Violations Created and Minimum Wage (Potentially) Increased
- Employees will have a private cause of action whose employers violate Virginia’s wage payment law. Employers that fail to timely and completely pay wages will be subject to civil penalties of up to $1,000 for each violation. Damages include back pay, liquidated damages, prejudgment interest at a rate of 8 percent, and reasonable attorneys’ fees and costs.
- Employers may not discriminate or retaliate against employees for filing a complaint or participating in a proceeding involving allegations of unpaid wages.
- Employees will have a private cause of action for a subcontractor’s employees against the subcontractor and general contractor for failure to pay wages.
- Governor Northam has proposed an amendment to House Bill 395 and Senate Bill 7, which would increase the minimum wage to $12.00 by 2023. The General Assembly will consider these amended bills at a special session currently scheduled for April 22, 2020. If passed, the hourly minimum wage will increase in phases, with the first phase increasing hourly minimum wage to $9.50 effective May 1, 2021.
Increased Focus on Worker Misclassification
- Individuals will have a private cause of action when they claim they have been misclassified as independent contractors instead of employees. Successful plaintiffs may be awarded lost compensation equal to wages, salary, employment benefits, and expenses incurred that otherwise would have been covered by insurance, as well as reasonable attorneys’ fees and costs.
- Individuals may bring private actions for retaliation if they report alleged misclassification. Employers found liable for retaliation will be subject to a civil penalty up to the value of the employee’s lost wages.
- The Virginia Department of Taxation has the authority to oversee investigations into suspected cases of worker misclassification and levy penalties. The Department of Taxation may share information with other agencies, including the Department of Labor and Industry, about employee misclassification.
Limitations on Non-Compete Agreements
- Employers may not enter into or enforce a covenant not to compete against a “low-wage employee.” Such employees may bring a private cause of action against an employer to seek injunctive relief, lost compensation, liquidated damages, and reasonable attorneys’ fees and costs.
- “Low-wage employee” is defined as an employee whose average weekly earnings are less than the average weekly wage of employees in Virginia. Given the average weekly wage in the Commonwealth is a little over $1,000, this “low wage” is not so “low.” Significantly, “any employee whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the employer” are excluded.
What Virginia Employers Should Do Now
Virginia employers should take the below steps now to ensure compliance with employment-related bills signed into law.
With respect to workplace discrimination and harassment:
- Update relevant handbook policies to include sexual orientation, gender identity, pregnancy, childbirth, and related medical conditions, including lactation.
With respect to wage payments:
- Review payment procedures to limit the prospect of private actions by employees for failure to pay wages.
- Ensure that your paystubs are compliant with the recently amended wage payment law which, as of January 1, 2020, requires employers to provide a paystub or online accounting to each employee on every regular pay date, providing the name and address of the employer, the number of hours worked during the pay period, the rate of pay, the gross wages earned by the employee during the pay period, and the amount and purpose of any deductions therefrom.
- If you are a general contractor, institute oversight procedures to ensure all subcontractors are appropriately paying their employees.
With respect to worker classification:
- Review agreements and relationships with independent contractors to ensure they are appropriately classified.
With respect to non-compete agreements:
- Determine whether you have any non-compete agreements with individuals defined as “low-wage employees,” and, if so, prepare to make changes to your approach in enforcing such agreements.
- Ensure that low-wage workers are not asked to enter into non-compete agreements.
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