Over the last year, the operation of many businesses changed to include more remote work and different ways of servicing clients. To put it mildly, COVID-19 has been extremely hectic and challenging for almost every sector. Nonetheless, as we continue to move towards improvement with the virus, it is important to stay on top of the many new employment laws that have emerged.

One important legal update is the Virginia Overtime Wage Act (the “Act”). Starting on July 1, the Act imposes additional requirements on employers while limiting some practices that were previously permitted. Be sure to keep in mind the following:

1. You must pay for over 40-hours worked. The federal Fair Labor Standards Act (FLSA) allows select options for not paying time and a half to non-exempt employees in certain scenarios (i.e., the fluctuating work week and day rate arrangements). However, the new Act essentially eliminates these options and requires that no matter what employers must pay time and a half for over 40 hours worked. Employers should carefully consider how to provide for this payment – as a failure to do so can result in significant penalties for businesses.
2. Employees now have a greater opportunity to sue. Under the FLSA, employees had two years to sue for overtime violations (with three years for willful violations). The Act provides a three-year statute of limitations for all violations. The Act also affords employees the right to sue for liquidated (i.e. double) damages for all claims while removing certain defenses provided to employers under the FLSA. Employers should consider exploring an audit to determine any potential violations (as employees can file suit even after leaving an employer). Consider consulting with counsel as the audit process can bring additional exposure if not handled in a conscientious manner.

3. Misclassification means significant exposure. In 2020, Virginia passed legislation increasing penalties for employers that improperly classify employees as independent contractors. The new Act continues this trend by directly providing penalties for employers that improperly classify non-exempt workers as “exempt.” Under the Act, all employers (salaried and hourly) are entitled to receive time and a half for hours worked over 40-hours. The Act therefore “widens” the rights of employees beyond those already provided under the FLSA.