Significant Overtime Rule Changes in Virginia
April 12, 2021
Beginning July 1, 2021, Virginia employers will be subject to new state overtime pay requirements under the Virginia Overtime Wage Act (VOWA). Previously, Virginia had been content to rely on the overtime pay requirements of the federal Fair Labor Standards Act (FLSA).
As with the FLSA, the VOWA obligates employers to pay one and one-half times an employee’s regular rate of pay for hours worked in excess of 40 in a workweek. Departures from the FLSA will include:
- For salaried non-exempt pay plans, the regular rate of pay is calculated for overtime purposes (based on 40 hours, not actual hours worked).
- The Fluctuating Workweek method of payment is now prohibited.
- Automatic three (3) years of back pay with liquated damages, and treble damages for willful violations.
- An 8% pre-judgement interest penalty.
- Employers pay the employee’s attorney’s fees.
Overtime Rate Calculations for Salaried Nonexempt Pay Plans
For employees who are salaried or paid on some other regular basis, the VOWA provides that the regular rate of pay is based on 40 hours per week versus total hours worked (same as with the FLSA).
Significantly, the new standard under the VOWA for salaried and other regularly paid employees precludes employers from paying traditionally non-exempt employees a fixed salary to cover wages for hours in excess of 40 in a workweek (including on a fluctuating workweek basis), requiring instead an hourly rate calculation for overtime pay.
Employers also may face greater liability for misclassifying employees as exempt under the new law. Under federal law, employers commonly argue that a misclassified employee’s salary already covers the employee’s straight-time wages for all hours worked and, therefore, only the additional “half-time” amount is owed for hours in excess of 40. The VOWA eliminates this argument, providing instead that all non-exempt salaried employees are entitled to one and one-half times their regular rate for any hours worked over 40.
Statute of Limitations Expanded
The VOWA provides that an employee’s overtime claim may include workweeks in a total span of up to three years. It imposes a three-year statute of limitations on overtime claims, rather than the FLSA’s default two-year limitations period (three years for willful violations).
Automatic Liquidated Damages
While the FLSA provides for liquidated damages equal to the amount of unpaid overtime wages, an employer may defend against such a damages claim on the basis that it acted in good faith, with reasonable grounds for believing it acted in compliance with the FLSA’s requirements. This defense is unavailable under the VOWA, providing instead that all overtime wage violations are subject to double damages — plus pre-judgment interest at eight percent a year. In addition, the law provides for treble damages for “knowing” violations.
As SESCO’s history is rooted in Wage and Hour compliance and representation of clients before the Department of Labor, we offer the following:
- SESCO Compliance Publication – “How to Comply with Wage and Hour Regulations” ($35.00 for retainer clients / $55.00 for non-retainer clients). Contact SESCO to order.
- All retainer clients receive an annual Wage and Hour/HR compliance assessment. We will be scheduling these audits with clients over the next few months as requested to assess compliance and practices.
- If you are not a SESCO retainer client, simply call or email us and we’ll be happy to discuss our monthly Service Agreement.
