The Virginia legislature enacted a series of sweeping employment laws, all but one of which went into effect July 1. These changes affect employers and employees in many sectors of the economy, bringing about reforms that have long been sought by progressive activists and labor interests. A primer for Virginia employers is below:
Following the lead of its more progressive sister states, Virginia enacted a law on April 9 banning the use of non-competes for low-wage workers. The law, which went into effect July 1, 2020, applies to non-competes entered on or after that date.
The statute provides that “[n]o employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee.” A low-wage employee is defined as either: (i) an employee, intern, student, apprentice, or trainee whose average weekly earnings are less than the average weekly wage of the Commonwealth or who is employed without pay; or (ii) an independent contractor who is compensated for his services at an hourly rate les than the median hourly wage for the Commonwealth for all occupations reported by BLS. A covenant not to compete, in turn, is defined as an agreement that restrains, prohibits, or otherwise restricts an individual’s ability to compete with his former employer.
Under the new law, employers cannot send cease and desist letter to low wage employees who “violate” their non-competes. Doing so will subject employers to liability for various damages and fees. First, employers who violate the law are subject to civil penalties of $10,000 per violation. Additionally, low wage employees who are subject to non-competes can bring civil actions against their employers for appropriate relief, including enjoining the employer’s conduct, ordering payment of liquidated damages, and awarding lost compensation, damages, and attorneys’ fees. If a court determines an employer has violated the statute, the plaintiff is entitled to recover his or her reasonable costs, expert witness fees, and attorneys’ fees from the employer or third-party who attempted to enforce the non-compete.
The enforceability of non-competes in Virginia was previously controlled by what the court considered to be reasonable and narrow enough to protect a company’s legitimate business interests without hindering the employee’s ability to earn a living. As a result of the new law, low wage earners will no longer be subject to traditional non-competes.
The statute does not preclude employers from requiring low wage employees to enter into traditional confidentiality agreements or non-disclosure agreements to preclude employees from taking, misappropriating, threatening to misappropriate, or sharing certain information, such as trade secrets or proprietary or confidential information.
Virginia Values Act
Senate Bill 868 prohibits discrimination by employers (among others) on the basis of sexual orientation and/or gender identity. The bill creates a private right of action for: (i) discriminatory acts by employers with more than 15 employees; (ii) unlawful discharge on the basis of race, color, religion, national origin, sex, pregnancy, childbirth, or related medical conditions (including lactation) by employers with more than 5 but less than 15 employees; and (iii) unlawful discharge on the basis of age by employers with more than 5 but less than 20 employees. The law’s effective date comes in the wake of the Supreme Court’s landmark ruling in Bostock v. Clayton County, Georgia, which held that Title VII of the Civil Rights Act protects LGBTQ+ workers from workplace discrimination on the basis of their sexual orientation or transgender status. Like the Virginia Values Act, Title VII applies only to employers with fifteen or more employees. Thus, Bostock does not provide a federal right of action for those who cannot maintain a claim under the Virginia Values Act due to the small size of their employer. However, workers of employers with 15+ employees who have been subjected to discrimination will now have a separate right of action under state and federal law.
On April 11, 2020, Governor Northam signed Virginia House Bill 798 into law. The law protects employees from retaliation for: (i) reporting violations or suspected violations of state or federal law to their supervisor or any governmental body; (ii) refusing to engage in criminal conduct or carry out an order that would violate state or federal law; and (iii) engaging in protected activity by participating in an investigation. The law grants employees the right to sue for injunctive relief, reinstatement, and uncapped compensation for lost wages and benefits.
Nonpayment of Wages
The Governor signed several bills regarding the nonpayment of wages into law in April of 2020. House Bill 123 gives employees a private right to action to recover unpaid wages they are owed plus interest at 8% per annum from the date the wages were due. Further, if the employer knowingly failed to pay the wages, the court is required to award the employee reasonable costs and attorneys’ fees plus three times the amount of the wages due.
House Bill 336 provides that if, during an investigation into a complaint of an employer’s non-payment of wages, the Commissioner of Labor and Industry needs additional information that creates a reasonable belief that other employees of that employer were not paid, the Commissioner may investigate whether the employer failed or refused to pay those other employees. If the Commissioner finds that such a violation occurred, he or she can institute proceedings on behalf of any employee against the employer, even if there’s no written complaint of the violation and even if the employee has not consented.
House Bill 337 prohibits employers from discharging or discriminating against any employee who filed a complaint, instituted proceedings, or testified in proceedings related to nonpayment of wages. The law authorizes the Commissioner to institute proceedings against employers who violate it. Available remedies include reinstatement of employment, recovery of lost wages, and liquidated damages.
Misclassification of Employees
House Bill 984 provides a private right of action for individuals who are misclassified as independent contractors. The court can award damages in the amount of the employee’s wages, salary, or employment benefits, expenses that would have been covered by insurance, reasonable attorneys’ fees, and costs. Under the new law, workers are presumed to be employees unless the employer proves otherwise pursuant to IRS guidelines.
House Bill 1407, which doesn’t go into effect until January 1, 2021, prohibits employers from classifying an employee as an independent contractor if the worker is actually an employee. A worker is deemed to be an employee unless the employer proves such person is an independent contractor. Employers who violate this law are subject to civil penalties and debarment from public contracts.
House Bill 1199 prohibits employers from discharging, disciplining, threatening, discriminating against, or penalizing an employee or independent contractor because that person reports (or plans to report) the employer for a misclassification. The law also prohibits those actions against a worker who is requested or subpoenaed to participate in an investigation, hearing, or court action. However, the prohibitions only apply if the employee acted in good faith and upon a reasonable belief that the information is accurate. The Commissioner can institute proceedings against employers who have taken prohibited actions. Available remedies include reinstatement of employment and recovery of lost wages. In addition, employers who violate the law are subject to civil penalties equal to the employee’s lost wages.
With the exception of House Bill 1407 regarding misclassification of independent contractors, all of the foregoing laws went into effect on July 1, 2020. Accordingly, employers who have not yet done so should take the time to audit their employee manuals, operating policies, and employment agreements to determine whether changes are needed to comply with the new laws. .