Businesses of all sizes have, understandably, been consumed by how to address the numerous pressing issues that the COVID-19 pandemic has wrought. As a result, it can be easy to lose sight of the dramatic changes to Virginia employment law, which have created a significantly more employee-friendly venue as of July 1, 2020. While Littler has written a number of recent articles about certain of these laws, and discussed them in a recent webinar, this article addresses several additional pieces of legislation enacted by the Commonwealth’s Democratic “trifecta” that employers should have on their near-term radar screen.
New Private Right of Action and Paystub Requirements Under the Virginia Wage Payment Act
The Virginia Wage Payment Act (Va. Code § 40.1-29) (the “Act”) is intended to curb “wage theft” within the Commonwealth by, among other things, prohibiting employers from reducing or withholding employee wages other than for lawful deductions, and requiring that employees whose jobs have been terminated receive all wages owed by their next regularly scheduled pay date.
Governor Ralph Northam approved a new bill passed by the General Assembly (HB 123/SB 838) that overhauled the Act’s enforcement mechanisms, effective July 1, 2020.
Historically, employees who believed they were not paid in accordance with the Act had been required to file an administrative claim with the Virginia Department of Labor and Industry (DOLI), the state agency authorized to enforce wage and hour regulations. That agency could then choose to sue on the employee’s behalf, but the employee could not file a lawsuit of their own. Furthermore, penalties for any such violations were capped at a fine of up to $1,000 per violation, plus the amount of back wages owed and 8% annual pre-judgment interest if the employee’s final paycheck was deficient.
These rights and penalties changed significantly on July 1, 2020. The law now specifically provides a private right of action under the Act. Employees (whether current or former) must file suit within three years “after the cause of action accrued,” but are not required to exhaust their administrative remedies beforehand by filing an administrative claim with DOLI. Moreover, any private lawsuit under the Act may be filed either individually, or as a collective action governed by the same procedures as collective actions under the FLSA. See 29 U.S.C. § 216(b).
A prevailing plaintiff(s) will be entitled to double damages (i.e., the actual wages owed, plus “an additional equal amount as liquidated damages”), 8% annual prejudgment interest, and reasonable attorney’s fees and costs.
Further, if an employer knowingly fails to pay wages in accordance with this law, i.e., acts with (i) actual knowledge of a violation, (ii) deliberate ignorance of a violation, or (iii) reckless disregard for the truth of the falsity of the information, the plaintiff(s) may recover treble damages. The employee is not required to prove that an employer acted with intent to defraud to recover treble damages. If, however, an employer is found to have willfully refused to pay wages with intent to defraud, criminal penalties also may be imposed. Specifically, if the amount of wages unlawfully withheld is less than $10,000, the employer is subject to a Class 1 misdemeanor, and an employer that withholds $10,000 or more, or that is a repeat willful violator of the Act, is subject to a Class 6 felony. On the other hand, the law provides that if the employer’s failure to pay wages is the result of a bona fide dispute between the employer and employee, there will not be any criminal liability.
There has also been further clarification of Virginia’s paystub requirements. The Act was previously amended as of January 1, 2020, so Virginia employers (other than those engaged in agricultural employment), like employers in the overwhelming majority of states, now are required to issue written paystubs to their employees. Such paystubs may be issued either in hard copy or electronically through an “online accounting,” but must include:
The statute implementing these new requirements, however, did not distinguish between employees who are exempt from overtime and those who are not. This caused many employers to seek clarification concerning whether the law’s requirement that “hours worked” be included on paystubs applied to exempt employees, because such employees are not paid based on hours worked and, therefore, frequently do not have their hours worked tracked. Due in part to this confusion, the DOLI announced a six-month “grace period” on its enforcement of the “hours worked” portion of the law. That grace period ended on July 1, 2020.
In the interim, the General Assembly reconvened for an emergency session and passed additional legislation (HB 689), which took effect on March 10, 2020. This legislation clarified that the “hours worked” requirement only applies to employees who are paid on the “basis of the number of hours worked” or who are paid “less than the standard salary level…establishing an exemption from the [Fair Labor Standards Act (FLSA)]’s overtime premium pay requirements.” Consequently, it seems that employers will not need to report the number of hours worked if an employee is paid a salary that meets or exceeds the U.S. Department of Labor’s salary requirement for exempt employees (currently $684 per week) or is paid on a basis other than hours worked. However, this legislation also requires that paystubs “include sufficient information to enable the employee to determine how the gross and net pay were calculated” – meaning that hours worked information likely would still need to be reported for any non-exempt employees who are to receive overtime, even if their non-overtime pay is determined using a method that would normally exempt them from the “hours worked” reporting requirement.1 The DOLI issued a clarification explaining that it will begin enforcing these requirements as of July 1, 2020.
Greater Likelihood of Facing Wage and Hour Claims from Multiple Employees in a Single Proceeding
Two other new laws enacted this session that went into effect on July 1 will also make it more likely that Virginia employers face wage and hours claims from more than one employee in a single proceeding. First, where DOLI is investigating alleged violations of the Virginia Wage Payment Act raised by one employee and learns, during the course of the investigation, that the alleged violation affected other employees, the agency has the authority to investigate the potential violations for all such employees, i.e., even those who never filed a DOLI claim. If appropriate, the DOLI Commissioner may also file suit on behalf of all affected employees.
Second, employers may not terminate or otherwise retaliate against employees because they filed a wage payment complaint or “inquired about or discussed with, or disclosed to, another employee” their own wage/compensation information, or that of another employee. Violations are punishable by a fine of up to $100 per violation. There is an exception, however, providing that employers may lawfully take action against individuals with access to company compensation information who disclose other employees’ wage/compensation information to a colleague without such access.
Notice to Employees Regarding Pregnancy Discrimination and Accommodation
As part of the legislative overhaul of the Virginia Human Rights Act (discussed here), the General Assembly also clarified that prohibited sex discrimination includes discrimination on the basis of lactation (along with pregnancy, childbirth, or other medical conditions related to pregnancy). Accordingly, as of July 1, breaks to express breast milk and/or access to a private location other than a bathroom in order to express breast milk are two types of reasonable accommodations that may (and, in appropriate circumstances, should) be given to a woman who requests them.
To ensure that employees are informed of these changes in the law, employers with five or more employees are required to post—both “in a conspicuous location” (e.g., an employee intranet or break room bulletin board) and in any employee handbook they use—information about:
Covered employers must provide this information directly to every new employee who commences employment on or after July 1, 2020. Employers must also give the same information to any current employee within 10 days of when the employee notifies her employer that she is pregnant. Finally, employers must provide this notice to all existing employees by no later than October 29, 2020 (i.e., within 120 days of the July 1, 2020 effective date).
What Comes Next?
Virginia employers should be aware that additional changes may be on the horizon as the General Assembly prepares to convene for a special legislative session later this summer. While the governor’s stated purpose in calling this special session is to address budgetary shortcomings due to the COVID-19 pandemic, it is certainly also possible that labor and employment-related bills will be discussed. Littler will continue to report on any significant developments.
1 Consistent with this, employers should be cautious when applying the “hours worked” exception. It may have been the Legislature’s intent to create an “hours worked” exception limited to employees who are exempt from overtime under the FLSA. The statutory language quoted above, however, is a bit broader. Because employees must satisfy both the “salary test” and the “duties test” to qualify for exemption under the FLSA, an employer may have employees who earn more than the federal salary threshold for exempt employees, but who nonetheless are classified as non-exempt, either because the employees do not satisfy the “duties test” or because the employer chooses not to classify them as exempt. In this situation, employers should still report the employees’ hours worked on their paystubs because, while the employer might not expressly be required to do so under the statutory language, such information is still needed in many instances for overtime-eligible employees to understand how their gross and net pay were calculated.