Virginia businesses get ready — changes are coming: You won’t be able to identify most workers as independent contractors anymore. Employees will have new whistleblower protections. And businesses will have to pay employees on time or face jail time.
These are just some of the many employment laws signed by Gov. Ralph Northam last month.
Virginia employers need to be prepared for these new laws — including the Virginia Values Act that I wrote about last week — and develop a program to be in compliance.
The new laws that take effect July 1, 2020 include:
- Virginia employees will be protected from retaliation if they report to a supervisor or any governmental body violations or suspected violations of federal or state law.
They also will be protected if they don’t engage in a criminal act or carry out an order that would violate federal or state law. Protections also apply to those who engage in a protected activity by participating in an investigation covered by the law’s protections.
Employers cannot discharge, discipline, threaten, discriminate against, or penalize any employee who engages in the protected activity or take any other retaliatory action affecting their employment benefits because of the worker’s protected conduct.
Employees can seek injunctive relief, reinstatement and compensation for lost wages, benefits and other remuneration for violations.
Hours worked reporting:
- Companies must report on the wage statements of employees the number of hours worked during the pay period if the employee is paid either hourly or, for salaried employees, the salary is less than the standard level adopted by the Department of Labor, which currently is $35,568.
- Businesses, organizations or individuals won’t be able identify workers as independent contractors.
A new Virginia law creates a presumption that any individual performing services for a person for remuneration is an employee for that individual or company. Only those individuals properly excluded consistent with the guidelines set forth by the Internal Revenue Service will be considered independent contractors.
The law also will allow an individual not properly classified as an employee to bring a private civil state court action for damages if the employer had knowledge of the misclassification. A successful plaintiff can receive wages, lost compensation, employment benefits (including insurance expenses) and reasonable attorney’s fees and costs in bringing the action.
A separate law signed into law by the governor also prohibits retaliation to individuals who report or plan to report improper classification.
Any individual who is retaliated against can file a complaint with the Commissioner of Labor and Industry, who can bring an action against the employer.
Damages are limited to the employee’s wages that are lost as a result of the violation. Civil penalties can be assessed by the commissioner and those fines are to the paid to the Literary Fund.
A third and separate law gives the Department of Taxation investigatory authority to determine if a person is a properly classified independent contractor using the test established by the IRS.
That new law sets levels of offenses for assessment of civil penalties, which range from $1,000 per misclassified individual for a first offense up to $5,000 per misclassified individual for third or subsequent offenses. These civil penalties will be paid to the general fund, according to the law.
The law also could bar employers from competing for public contracts if the tax department finds an employer guilty of misclassification.
Employers need to immediately review all workers performing services for their businesses and determine if they are properly classified. Parties cannot simply agree to an illegal arrangement.
- Under the new law, workers can bring a private cause of action against employers for unpaid wages.
The law permits recovery of wages paid with 8% interest from the date wages were due, as well as the recovery of treble damages (three times what is owed) plus a $1,000 civil penalty per violation. For knowing violations, the employer also may be required to pay a successful employee’s attorney’s fees.
The law also provides for criminal penalties for knowing violations ranging from a misdemeanor to a felony depending on the amount owed. This is because the law considers the withholding of wages to be a theft.
Restrictive covenants for low wage workers:
- Employers now will be prohibited from entering into, enforcing or threatening to enforce restrictive covenants (such as non-competition agreements) for workers whose average weekly earnings are less than the average weekly wage in Virginia (currently around $1,000).
The new law expressly includes interns, students, apprentices, or trainees, and certain independent contractors.
Minimum wage increase:
- Starting May 1, 2021, Virginia’s minimum wage will go from the current $7.25 per hour to $9.50 per hour.
It will increase to $11 per hour on Jan. 1, 2022 and to $12 per hour on Jan. 1, 2023. There are additional increases up to $15 per hour but those will require General Assembly approval by July 1, 2024.