Twelve years ago, the volume of federal equal employment opportunity charges swelled in tandem with unemployment caused by the banking crisis. If the pandemic generates a similar wave, Virginia’s employers might take some hard hits.
In April, the Commonwealth passed some of the nation’s strongest worker protection laws. They went into effect July 1. Certain employment claims can proceed in Virginia’s courts for the first time, so expect more state court employment litigation. Also, pre-trial dismissal is tougher to win there than in federal courts, so expect litigation to be riskier and more costly to employers.
New Workplace LGBT Protections
The Virginia Values Act made Virginia the first state in the southeastern U.S. to protect LGBT residents by expanding the Virginia Human Rights Act (VHRA). Employees will be protected from job discrimination based on sexual orientation and gender identity. Significantly, the new law allows plaintiffs to file suit for discrimination while they are still employed and it removes the cap on damages a plaintiff can recover.
Hair Discrimination is Banned
A new law will prohibit discrimination on the basis of physical traits associated with race including “hair texture, hair type, and protective hairstyles such as braids, locks and twists.” Virginia will be the fifth state or jurisdiction in the U.S. to ban hair discrimination.
As a general rule, an employee’s hair texture or style does not impact their ability to perform the essential functions of a job. Employers should address these new changes in training and in writing in the employee handbook, with particular focus on dress code and anti-discrimination policies.
Employees Can Sue for Being Misclassified as Independent Contractors
Employers will see investigations and civil lawsuits come out of Virginia’s Department of Taxation (DOT) involving employers who misclassify employees as independent contractors. Misclassified employees can bring civil actions (including for retaliation for reporting the misclassification) for lost wages, benefits, and attorneys’ fees. The burden of proof is on the employer to demonstrate the relationship was an independent contract and not employment. The DOT will be able to investigate misclassifying employers, penalize them heavily (up to $5,000 per misclassified employee for repeat offenders), and even bar them from winning Virginia public contracts for up to three years.
Employees Can Sue for Nonpayment of Wages
Now employees can sue their employers in state court for improperly withholding wages or nonpayment of wages owed. The employee has three years from the date the action occurred to sue. Previously, Virginia provided limited options for employees, who either had to assert a Fair Labor Standards Act claim, a breach of contract claim, or file an administrative complaint with Virginia’s Department of Labor.
The law has criminal and civil penalties for employers. An employer who willfully and with intent to defraud fails or refuses to pay wages may be guilty of a Class 1 misdemeanor if the value of the wages is less than $10,000, and a Class 6 felony if the value of the wages is $10,000 or more. Civilly, employers can be fined $1,000 per violation. In addition to reimbursement for the wages due plus 8% annual interest, an employer may be liable for triple the amount of wages due and reasonable attorney fees and costs.
Non-Compete Contracts Are Banned for Low-Wage Employees
Non-compete contracts are common in Virginia, and generally ban an employee from leaving their employer and competing with them for a number of years or within a certain area, or both. Non-competes must be tailored narrowly to protect only an employer’s legitimate business expectation.
Virginia’s new law goes further, allowing low-wage employees to bring suit against employers seeking to enforce a non-compete agreement entered after July 1, 2020. “Low-wage” is determined by the Virginia Worker’s Compensation Commission. As of now, it includes those earning less than $1,137 weekly or $59,124 annually. However, employees whose earnings come wholly or mostly from sales commissions, incentives, or bonuses are excluded.
Employers must post a copy of this law where OSHA and other similar posters are displayed. In a lawsuit, employees could win an injunction, liquidated damages, lost compensation, attorneys’ fees, and even expert witness fees.
Minimum Wage Increases
Starting next year, Virginia’s minimum wage will increase as follows:
May 1, 2021 $9.50
January 1, 2022 $11.00
January 1, 2023 $12.00
January 1, 2025 $13.50
January 1, 2026 $15.00
While it is hard to focus on anything but the pandemic right now, employers must start thinking about implementing these requirements. Today’s unemployment numbers dwarf those from the banking crisis 12 years ago.
With state law behind them, many employees who previously would have brought their claims in federal court will now file in state court. Because employers will have a more difficult time winning pre-trial dismissal in state court, more cases will go to trial.