Effective July 1, 2020, the Virginia employment law will drastically change to the benefit of those employed in the Commonwealth of Virginia. Heretofore, Virginia’s laws could be counted on to favor employers. Employees had little protection in the state anti-discrimination law, wage and hour laws, and, though increasing protections through case law existed in employee favor in the restrictive covenant arena, Virginia had no laws that regulated non-competes. The Virginia General Assembly with Governor Northam approval enacted legislation in these three areas which will forever change employment laws for the benefit of employees.
Virginia Wage Theft Prevention Law – Virginia Code Annotated Section 40.1-29
The Virginia Wage Payment Act was amended to include a Wage Theft Prevention Act making Virginia the last state in the DMV area to provide employees with a private cause of action and a collective action remedy as well as substantial penalties for an employer’s violation of wage payment laws. Prior to the amendment of the Wage Payment Act, employees could only file a claim with the Department of Labor and Industry to collect unpaid wages. Criminal penalties remain. Newly added Section H adds civil penalties that the Commissioner of the DOLI may apply. Section J creates a private cause of action that an employee may file on his/her own behalf or as a collective action consistent with that permitted under the Fair Labor Standards Act (FLSA). The court may award liquidated damages, up to triple the amount of wages due, and attorney’s fees and costs. The statute of limitations is three years after the cause of action accrued (when wages were due). Note, if the employee elects to file an administrative action first with the DOLI, the statute of limitations is tolled upon the filing of the action.
Employers in Virginia can now expect actions previously filed only as an FLSA claim with liquidated damages set at double the amount of wages due to include violations of the Virginia Wage Theft Prevention Law.
The amendments also provided the Department of Labor and Industry to remediate retaliation found to have occurred against employees seeking to enforce rights under the Act. These remedies include reinstatement, back wages, and liquidated damages.
What employers should be doing before the Act goes into effect:
- Review wage and hour compliance focusing on compliance with payroll timing, overtime pay, etc.
- If after review is completed it is determined that overtime pay is due, pay any unpaid overtime and if payroll pay dates are not in compliance, correct these issues.
Virginia Covenant Not to Compete Law Va. Code Ann. Section 40.1-28.7:7
This new law provides protection to “low-wage employees” from being required to enter into restrictive covenant agreements with employers. It prohibits an employer from entering into, enforcing, or threatening to enforce a covenant not to compete with any low-wage employee. As more specifically described below, a low-wage employee is an employee that makes an average wage over a 52-week period that is currently less than $60,424. Employers are required to post the law or a Department of Labor where it posts employee notices required by state or federal law. The Act applies only to covenant not to competes entered into after July 1, 2020.
A “covenant not to compete” is defined as any contract that includes a provision between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his former employer. The definition further provides that a “covenant not to compete” shall not restrict an employee from providing a service to a customer or client of the employer if the employee does not initiate contact with or solicit the customer or client.
A “low-wage employee” is any employee whose average weekly earnings during the 52-week period immediately preceding the date of termination of employment are lower than the average weekly wage of the Commonwealth of Virginia as determined by the Virginia Workers Compensation Commission. Currently that weekly wage is $1,162 ($60,424). Low-wage employees are defined as interns, students, apprentices or trainees employed with or without pay. It also captures independent contractors who are paid at an hourly rate less than the median hourly wage for the Commonwealth of Virginia as reported by the Bureau of Labor Statistics of the U.S. Department of Labor. Those hourly rates vary by occupation. The median for all occupations is currently $19.63. Notably, employees whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the employer.
A low-wage employee may bring a civil action against any former employer or other person that attempts to enforce a restrictive covenant in violation of the Act. It must be brought within two years of the latter of (i) the date the covenant was signed, (ii) the date the low-wage employee learned of the covenant, (iii) the date the employment relationship is terminated or (iv) the date the employer attempts to enforce it. The court may enjoin the conduct, award liquidated damages (unspecified as to what these are), damages, lost compensation, other unspecified damages and low-wage employee’s reasonable attorney’s fees and costs (including expert witness fees).
The Department of Labor and Industry may also impose a civil penalty of $10,000 for each violation.
What employers should be doing now (before July 1, 2020) is:
- Review template/form noncompetes to determine whether such noncompetes will comply with the new law.
- Make sure any current low-wage employees that should be governed by noncompetes have entered into a noncompete agreement before July 1, 2020 and that such agreements are clearly dated before July 1, 2020.
- Post the required notice by July 1, 2020.
Virginia Human Rights Act
The General Assembly substantially re-wrote the Virginia Human Rights Act adding additional protected characteristics and attractive legal rights and remedies for employees to pursue against their employers. The Virginia Human Rights Act covers public accommodations, housing and employment laws. This article focuses solely on employment law changes.
Protected Characteristics Added
In addition to the existing protections on the basis of race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions, age, marital status, disability, and status as a veteran, the revised Act adds sexual orientation and gender identity.
Private Rights of Action and Remedies
Prior to the amendments, the Virginia Human Rights Act provided a limited private right of action for employment discrimination to employees employed with employers that had more than 5 employees and less than 15 employees for employment discrimination other than age, which required more than 5 employees and less than 20 employees. Even then, the action could only be pursued in Circuit Court and then remedies were limited to 12 months backpay plus interest and attorney’s fees in the amount of 25% of backpay. No other remedies were available. For example, an employee could not seek compensatory damages or punitive damages. The employee could also not seek reinstatement.
Effective July 1, 2020, aggrieved persons may sue an employer in a private right of action for any adverse employment action on any protected characteristic, retaliation for participation in the filing of a complaint with the Human Rights Commission or in connection with whistleblower activities (state or federal) or retaliation for exercising any other right protected by law. Employers with five or more employees may be sued for any unlawful discharge based upon the protected characteristic above. The remedies are no longer limited, and employees may sue for backpay, compensatory and punitive damages, reinstatement, and uncapped attorney’s fees and costs.
Before filing a private action, an employee must first file a complaint with the Virginia Division of Human Rights and cannot sue until a determination has been issued. As was the case before the amendment, if the Division finds probable cause that discrimination occurred it will attempt conciliation. If that fails, the employee may institute suit. If the Division does not find probable cause that discrimination occurred the employee may proceed to file suit.
With these amendments to the Human Rights Act, Virginia State Courts will become an attractive venue for discrimination claims. Since Virginia Circuit Courts do not grant summary judgment with any frequency you can expect Plaintiff’s Attorneys to file these claims in your local Circuit Court and be ready to see the case through to completion.
Employers should revise anti-discrimination policies to include sexual orientation and gender. As always, care should be taken to document employment terminations and to address issues with performance as they arise.
If you have any questions about these new Virginia employment laws or employment law in general, please reach out to Susan Salen at email@example.com or call at 703-790-6240.