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Attention Virginia Employers: New Employment Laws Effective July 1, 2020

Author: Ginny Cascio Bonifacino, Natasha M. Nazareth Date: 05/29/2020

Categories: Employment Law & Litigation

Female hands filling out an employment agreement contract symbolizing changes in Virginia employment law. Even though employers are busy adjusting, evolving, and pivoting their policies due to the constantly changing effect of the Coronavirus pandemic, Virginia employers must also ensure they are complying with new employment laws that will be effective on July 1, 2020.  Many of these laws have significant penalties for non-compliance from by the employee and the Commonwealth so it is important for Virginia employers to treat these changes seriously and take steps to prevent any issues. 

The major issues are as follows:

  1. Misclassification of Workers as Independent Contractor.  In a very significant change from Virginia’s current law, all workers who provide services for compensation are presumed to be employees, unless the employer can show that the worker is an independent contractor under the IRS guidelines.  It also creates a private cause of action for workers to sue their employer if they are improperly classified or retaliated against because they report or plan to report misclassification, as well as, provides the Department of Taxation the power to investigate any violations starting January 1, 2021.  The independent contractor.
  2. Civil Rights Protections.  Starting July 1, 2020, employees have additional civil rights protections.  An employer (i) Cannot discriminate based on gender identity or sexual orientation or on pregnancy, childbirth and related medical conditions.  They also must provide reasonable accommodation for pregnancy, childbirth and related mediation conditions, including pumping when they return from work, except if the accommodations would impose an undue hardship on the employer. 
  3. Wage Claims.  In addition, the new laws provide employees with stronger remedies when their employer fails to pay their wages.  An employee, individually or as a class action, will now be able to bring a claim for unpaid wages, an equal amount of unpaid wages as liquidated damages, interest of 8% from the date of the wages were owed, and attorneys’ fees and costs. If the court determines the employer knowingly did not pay the wages, it will award (1) reasonable attorneys’ fees and other costs; and (2) an amount equal to triple the amount of wages due.  The new law further protects employees from retaliation and discrimination for a wage complaint.  The Commissioner of Labor will also have the power to investigate any claims to determine if other employees have been improperly paid and take further action.
  4. Non-Compete Agreements.  Similar with other states, Virginia has enacted a law that prohibits an employer from requiring a “low-wage employee” from entering into a non-compete agreement but may still protect its confidential information and trade secrets.  It defines “low-wage employee” as either (i) an employee, intern, student, apprentice, or trainee whose average weekly earnings are less than the average weekly wage of the Commonwealth (currently, $1,107/week) or who is employed without pay; or (ii) an independent contractor who is compensated for his services at an hourly rate that is less than the median hourly wage for the Commonwealth for all occupations as reported by the Bureau of Labor Statistics of the U.S. Department of Labor (currently about $19.63/hour).  If an employer violates this law, the employee may sue for an injunction and damages, and the Commonwealth may penalize the employer for $10,000 per violation.  
  5. Whistleblower Act.  Virginia has also enacted a whistleblower act that prohibits an employer from retaliating for an employee that (i) reports a violation of any federal or state law or regulation to a supervisor or to any governmental body or law-enforcement official; (ii) is requested by a governmental body or law-enforcement official to participate in an investigation, hearing, or inquiry; (iii) refuses to engage in a criminal act that would subject the employee to criminal liability; (iv) refuses an employer’s order to perform an action that violates any federal or state law or regulation and the employee informs the employer that the order is being refused for that reason; or (v) provides information to or testifies before any governmental body or law-enforcement official conducting an investigation, hearing, or inquiry into any alleged violation by the employer of federal or state law or regulation.

Employer Recommendations

  1. Audit your independent contractors to ensure they are properly classified.
  2. Update your Employee Handbook to reflect these new laws.
  3. Review your non-compete and confidentiality agreements to ensure compliance with these laws.
  4. Ensure appropriate training of your staff and personnel to ensure these laws are properly implemented and followed, including prevention of retaliation and discrimination, as appropriate. 

These laws can expose Virginia employers to significant liability but we are here to help you ensure compliance and prevent liability. Please feel free to contact Natasha M. Nazareth at nnazareth@mcmillanmetro.com or Ginny Cascio Bonifacino at gcbonifacino@mcmillanmetro.com.