Virginia Businesses Should Brace Themselves for Sweeping Employment Law Changes Taking Effect July 1 – Part Two

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Effective July 1, 2020, Virginia’s employment laws are substantially changing to provide broader protections to employees in many areas. We previously summarized the Virginia Values Act (VVA), which goes into effect on July 1, 2020, and subjects employers with more than five employees to new state claims for, among other things, gender identity and sexual orientation discrimination and for larger damage awards.

Because of the significance and volume of the new laws going into effect July 1, 2020, we covered the first three of the new laws (employee misclassification, whistleblower protection, and wage protection, pay transparency and pay stubs laws) in Part One of this blog and will address the new laws prohibiting low-wage employee non-compete agreements and treatment of marijuana convictions in this Part Two.

Prohibition Against Low Wage Employee Non-Competes (Virginia Code § 40.1-28.7:7)

Effective July 1, 2020, an employer may not enter into, enforce, or threaten to enforce, a covenant not to compete against any “low paid employee.” For purposes of this law, a covenant not to compete is an agreement between an employer and employee that restrains, prohibits or otherwise restricts an individual’s ability to compete with their employer following termination. The law 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.” Although not particularly clear, this appears to mean that a “covenant not to compete” cannot prohibit an employee from providing service to a customer if the work is unsolicited. The new law does not prohibit current non-compete agreements. Nor does it prohibit standard confidentiality agreements such as those designed to prohibit misappropriation of trade secrets or confidential information.

Low-Wage Employee Defined. A low-wage employee is defined as an employee or independent contractor (if paid by the hour) whose average weekly earnings are less than the average weekly wage in Virginia. Effective July 1, 2020, the average weekly wage in Virginia is $1,137 per week (or $59,124 per year). The law excludes from “low-wage employee” any employee whose income is derived predominantly or entirely from sales commissions, incentives or bonuses paid by the employer.

Private Right of Action. In addition to a public enforcement provision, this law also provides employees with a private right of action to receive an order voiding the covenant, along with “all appropriate relief,” including an injunction, liquidated damages, lost compensation, attorney’s fees, expert fees and costs.

Anti-Retaliation. Retaliation as a result of an employee bringing a civil action to enforce rights under this law is prohibited.

Posting Requirement. Employers must post either a copy of the new law or a summary approved by the Virginia Department of Labor and Industry in their workplace. The required notice, which is not yet available, will be codified as Virginia Code Section 40.1-28.7:7.

Marijuana Convictions (Va. Code § 18.2-250.1)

Decriminalization of Marijuana. On May 21, 2020, Governor Ralph Northam signed a bill decriminalizing simple possession of marijuana under state law. While it remains unlawful in Virginia to possess marijuana even for personal use, simple possession will now result in a civil penalty of no more than $25, rather than a criminal conviction subject to jail time.

Prohibition of Asking about Arrest or Conviction for Simple Marijuana Possession. The new law also prohibits employers from requiring job applicants to disclose information concerning any arrest, criminal charge or conviction for simple possession of marijuana. When answering questions about arrests, criminal charges and convictions, the new law allows applicants to exclude references to or information about simple possession of marijuana. The law also prohibits educational institutions from demanding the same information from applicants for admission.

Conclusion

These new laws will dramatically change the employment landscape in Virginia. It is essential for employers to fully familiarize themselves with the new laws and ensure that they are prepared to implement them starting July 1, 2020.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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