Virginia Overtime and Disability Discrimination Rules Take Effect July 1, 2021

Posted on by David F. Dabbs in Employment Law

Effective for hours worked on or after July 1, 2021, Virginia employers will be required by state law to pay overtime to many employees. Overtime has previously been required in Virginia only by the federal Fair Labor Standards Act (FLSA). However, the new Virginia Overtime Wage Act (OWA) omits many exemptions that are provided under federal law, and thus expands overtime requirements to additional employees. The new law also provides the ability for employees to enforce overtime requirements in state court, and prohibits a less generous method of computing overtime pay that has long been recognized under the federal law. The OWA will be administered, and in some cases enforced, by the Virginia Department of Labor and Industry (DOLI). The new law will be codified as Va. Code § 40.1-29.2. Special considerations described below will affect public employers.

Also taking effect on the same date are further amendments to the Virginia Human Rights Act, which was already extensively amended last year, to extend state employment discrimination protections to disability and expand those requirements to match those of the federal Americans with Disabilities Act (ADA). Further information about disability-related changes is provided below.

Overtime Wage Act requirements, exemptions, and remedies

The Virginia OWA includes an exemption from its overtime requirement for employees who qualify for the so-called “white collar” exemptions from the FLSA for supervisory (“executive”) employees, “administrative” employees (who make or have substantial authority in implementing policy), learned and artistic professionals, and outside sales employees, all of whom as exempted from FLSA requirements under 29 U.S.C. § 213(a)(1). Most employees who qualify for the FLSA executive, administrative, and professional exemptions are required to be paid on a “salary basis” (which restricts the employer’s ability to dock pay for missing time) at a minimum rate of (currently) $684 per week. The OWA also incorporates overtime exemptions that are provided in the FLSA for “motor carrier” employees (e.g., certain truck drivers) under 29 U.S.C. § 213(b)(1), and for certain drivers and drivers’ helpers making local deliveries under 29 U.S.C. § 213(b)(11).

However, numerous other long-standing exemptions and exceptions from FLSA overtime requirements are not duplicated under the new state law. For example, the OWA does not include exemptions corresponding to FLSA provisions for seasonal amusement and recreation establishments, domestic companionship services, computer programmers, or automobile salespeople. Nor does it contain provisions recognizing an exception under FLSA § 207(i) for employees of retail or service establishments who are compensated principally by commissions. (The availability under the state law of some FLSA exemptions and exceptions may be affected or informed by the logic of positions DOLI and the Attorney General have taken with regard to public employers regarding 29 U.S.C. § 207(o) as described below.)

Another significant departure between the OWA and the FLSA is that the OWA explicitly prohibits the so-called “fluctuating workweek” method of overtime computation. Under the FLSA, it is possible in limited circumstances to compute overtime for a non-exempt salaried employee by dividing the fixed salary by the total number of hours worked, including overtime hours, thus computing a “regular rate” independently for each week, and then paying only one-half of that regular rate as an overtime premium. This method has often been important in calculating back pay damages in FLSA exemption misclassification cases, where the employees claiming overtime have typically been salaried. However, use of the fluctuating workweek method for either purpose will be prohibited by Virginia law for work performed on or after July 1, 2021.

The largest procedural effect of the OWA will be to permit overtime claims to be brought in state rather than federal court. This is significant in part because summary judgment without trial is procedurally more difficult for employers to obtain in Virginia state court. This procedural effect may take several years to be fully felt, as for the next several years hybrid actions (raising claims under both laws, before and after July 1, 2021) will still be removable to federal court because they raise a federal question under FLSA.

The OWA also provides modestly greater remedies than the FLSA. The OWA incorporates most of the remedial provisions of Virginia’s wage payment law, Va. Code § 40.1-29, as it was amended last year. These include potential $1,000 civil penalties imposed by DOLI, plus private actions including collective actions. Aggrieved employees can directly sue to recover back pay, “liquidated” (double) damages, prejudgment interest, and attorneys’ fees and costs, all of which are similar to FLSA except there is no standard on which employers can escape liabilities based on acting in good faith or with a reasonable basis for believing they were compliant. If the employer “knowingly” violates the OWA, damages are triple instead of double, and the limitations period is three years rather than two, both of which are greater than the remedies provided under FLSA.

Overtime Wage Act issues for public employers

Unlike the Virginia wage payment law, the OWA expressly defines “persons” who can be “employers” under the new law to include “the Commonwealth, any of its constitutional officers, agencies, institutions, or political subdivisions, or any public body.” “Political subdivisions” include city and county governments. Significantly, DOLI has taken the position online that “comp time” as permitted under the FLSA for public employees pursuant to 29 U.S.C. § 7(o) (which allows public employees to accrue overtime in leave balances, up to certain limits, instead of being paid immediately in cash) will not be permitted under the OWA, except for certain fire and police employees. (See Virginia Overtime Law FAQs - Scroll to # 11).

We understand that DOLI’s interpretation has been confirmed informally by Virginia Attorney General Mark Herring, as communicated through Governor Northam’s office to the Virginia Municipal League, the Virginia Association of Counties, and Virginia First Cities. This interpretation would require Virginia cities and counties to pay overtime after July 1 to most non-exempt employees immediately in cash, like private employers do. Time will tell if courts can square the proffered interpretation with the OWA’s directive to pay an overtime premium “pursuant to 29 U.S.C. § 207,” or if there will be some legislative fix or retraction on this or other issues.

The OWA includes special provisions to coordinate the new state requirements with FLSA overtime rules for police and fire employees under 29 U.S.C. § 207(k) (which permits the use of higher overtime thresholds averaged over periods as long as 28 days), and the “gap pay” requirement imposed for firefighters and certain police officers by Va. Code § 9.1-701. However, as noted above, DOLI appears to interpret the OWA to allow the continued use of comp time for fire and police employees who are covered by Va. Code § 9.1-701. Notably, however, that group excludes police employees of employers who have fewer than 100 police employees. It thus appears the comp time will not be permitted after July 1 for smaller police departments, under the DOLI interpretation.

Expansion of Virginia state disability discrimination rules

The 2021 amendments to the Virginia Human Rights Act result in the extension of requirements similar to the federal ADA to employers of six (6) or more employees (rather than the federal threshold of 15), and allow the enforcement of state disability discrimination rules under the expanded remedies provided last year for other equal employment classifications. (Read our June 2020 blog post "Virginia Employers Subject to Multiple New State Statutes" here). A new section, which will be Va. Code § 2.2-3905.1, imposes specific reasonable accommodation requirements similar to those of the ADA.

The amendments also require that employers post and include in any employee handbook information concerning employees’ rights to reasonable accommodation for disabilities, and further that such information be “directly provided” to new employees upon commencement of employment and to any employee within 10 days of their providing notice to the employer that they have a disability. The state Division of Human Rights of the Department of Law is directed to develop and publish the form of such a notice within 120 days of the effective date of the law on July 1, but it appears the posting and disclosure requirements will be in effect even before an official form of a notice is available. We expect that a copy of the new Va. Code § 2.2-3905.1 may be deemed compliant in the meantime.

The less demanding requirements of the pre-existing Virginians with Disabilities Act remain in effect for employers of all sizes. The 2021 amendments remove certain minor provisions of the Virginians with Disabilities Act that had been favorable to employers (one imposing a presumption that accommodations costing more than $500 were an undue burden on employers with fewer than 50 employees, and one protecting employers from negligent hiring liability for hires made because of the law’s requirements).

About the Author

David F. Dabbs advises and represents employers on all aspects of employment law, including applications, contracts, deferred compensation plans, handbooks, policies, terminations, releases, and restrictive covenants.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.