Virginia Makes Sweeping Changes to Its Overtime Law

Regular Rate of Pay Calculations

The VOWA joins the FLSA in requiring employers to pay non-exempt employees 1-1/2 times their regular rate for all hours worked over 40 in a workweek. For employees paid on an hourly basis, the regular rate is the hourly rate of pay plus any other non-overtime wages paid or allocated for that workweek, excluding any amounts that are excluded from the regular rate by the FLSA.

However, for employees paid on a salary or other regular basis, the regular rate is 1/40th of all wages paid for that workweek. Importantly, this seems to preclude Virginia employers from paying non-exempt employees a fixed salary to cover straight time wages for hours over 40 in a workweek. It also seems to invalidate the fluctuating workweek method of paying overtime compensation that is permitted under the FLSA.

Statute of Limitations

The FLSA’s statute of limitations for unpaid overtime claims is two years, and three years for willful violations. The VOWA applies a three-year statute of limitations for all unpaid overtime claims.

Liquidated Damages

Under the FLSA, an employer can be held liable for liquidated damages in the amount of the unpaid wages, but it can defend against such damages if it can show it acted in good faith with reasonable grounds for believing it was complying with the FLSA. The VOWA does not have a good faith defense to liquidated damages – it simply provides that the court shall award them, plus pre-judgment interest. If the employer “knowingly” fails to pay overtime pay, the court must award treble damages. Like the FLSA, prevailing plaintiffs under the VOWA will also be awarded reasonable attorneys’ fees and costs.

Collective Actions

An amendment to the existing Virginia Code now permits an employee to bring an action “individually, jointly, with other aggrieved employees, or on behalf of similarly situated employees as a collective action consistent with the collective action procedures of the [FLSA].” This amendment may incentivize plaintiffs’ lawyers to seek to represent groups of employees, greatly expanding the scope of the litigation and the potential exposure for employers.

Takeaways

Virginia employers should review their overtime pay practices and revise them to comply with the new law by July 1, 2021. It is likely that there will be a wave of litigation after the VOWA goes into effect.