Welcome to our monthly state labor law updates. These briefs provide a general description and are not meant to be all inclusive of compliance requirements. This list is not inclusive of all legislative changes for employers across the U.S. Other upcoming changes may have been addressed in previous updates, which can be accessed online.
Employers are encouraged to work with their Inspiring HR Consultant before making policy changes to capture the full requirements of these laws.
This month, our notable upcoming state law changes take place in Virginia.
There are a number of new Virginia employment laws going into effect July 1, 2020, including restrictions on covenants not to compete for low-wage workers, expansion of employment discrimination protections for LGBT and pregnant employees, new private right of action, and investigative authority regarding misclassification of workers as independent contractors, stricter penalties for employers who commit wage violations, and whistleblower protections. Generally, these apply to employers of five or more employees. Below are key points for employers in these new laws.
Covenants Not to Compete Banned for Low-wage Workers
New legislation (SB 480) bans employers from entering into or seeking to enforce “covenants not to compete” for “low-wage” “employees” that are entered into on or after July 1, 2020. Each of these terms is defined broadly.
Not only does the law prohibit such agreements, but also provides a private right of action to bring a claim against an employer who seeks to enforce or threatens to enforce a covenant not to compete entered into July 1, 2020 or after against a low-wage worker, with a penalty of $10,000 per violation.
Discrimination Protections Extended to Pregnancy, LGBT Employees, and Traits Historically Associated with Race
Virginia has become the first southern state to ban discrimination against LGBT employees. The legislation (HB 1049) “prohibits discrimination in employment on the basis of sexual orientation or gender identity.” Its sweeping provisions also prohibit discrimination based on sexual orientation or gender identity in housing, public accommodation, public contracting, apprenticeship programs, banking, and insurance.
Also, VA HB 1514/SB 50 expands the Virginia Human Rights Act’s definition of racial discrimination to include traits historically associated with race, including hair texture, hair type, and protective hairstyles.
HB 827 amends the Virginia Human Rights Act to explicitly prohibit discrimination in employment on the basis of pregnancy, childbirth, or related medical conditions. It requires employers to engage in an interactive process to determine whether reasonable accommodation is possible for limitations related to pregnancy, childbirth, or related medical conditions. Employers are also specifically prohibited from requiring an employee to take leave if another reasonable accommodation can be provided.
Tougher Approach to Independent Contractor Misclassification
Virginia passed four bills seeking to crack down on employers who misclassify workers as independent contractors instead of employees. First, Virginia created a private right of action (HB 984/SB 894) for a misclassified worker to bring a claim against his employer for misclassification where the employer had knowledge of the worker’s misclassification. A court is permitted to award damages in any amount of any wages, salary, employment benefits, insurance expenses, all compensation lost to the individual, and reasonable attorneys’ fees and costs. This bill states that a worker is presumed to be an employee “unless it is shown that the individual is an independent contractor as determined under the IRS’s guidelines.”
Second, Virginia’s bill (HB 1199/SB 662) prohibits retaliation against a person for reporting misclassification. The law allows the Commission of Labor and Industry to institute proceedings against an employer who has taken retaliatory action, and to seek remedies including reinstatement of the employee, and recovery of lost wages. An employer could also be liable for a civil penalty equal to the value of the employee’s lost wages.
Third, new legislation (HB 1407/SB 744) authorizes the Department of Taxation to conduct investigations into suspected cases of worker misclassification. Note that this law does not go into effect until January 1, 2021.
Finally, new legislation (HB 1646) provides that the Board of Contractors shall require a contractor to classify workers appropriately as independent contractors or employees. The Board was given the ability to sanction contractors who are found to have misclassified workers intentionally.
Employers Will Face Stiffer Penalties for Wage Violations and Worker Misclassification
Finally, new legislation (SB 838) to prevent wage theft also goes into effect on July 1, 2020. Employees will have a private cause of action against an employer who fails to pay wages to recover the amount of wages due, plus eight percent interest annually from the date the wages were due. If an employer is found to have knowingly failed to pay wages, the employee is entitled to recover an amount equal to triple the amount of wages due along with reasonable attorney fees and costs. Retaliation against and employee who files a Wage Theft complaint or similar action is also prohibited.
Employees are empowered to bring an action individually, jointly, with other aggrieved employees as a collective action, or on behalf of similarly situated employees as a collective action consistent with the collective action procedures of the federal Fair Labor Standards Act. Employers will continue to face possible civil and criminal penalties under state law.
New Whistleblower Protections
HB 798 protects workers from retaliation for:
- Reporting in good faith a violation of any federal or state law or regulation to a supervisor or to any governmental body or law enforcement official;
- Being requested by a governmental body or law enforcement official to participate in an investigation, hearing, or inquiry;
- Refusing to engage in a criminal act that would subject the employee to criminal liability;
- Refusing an employer’s order to perform an action that violates any federal or state law or regulation when the employee informs the employer that the order is being refused for that reason; or
- Providing information to or testifying before any governmental body or law enforcement official conducting an investigation, hearing, or inquiry into any alleged violation by the employer of federal or state law or regulation.
The Whistleblower Law also authorizes an employee-whistleblower to bring a lawsuit (within one year of the alleged violation) seeking injunctive relief, reinstatement, and uncapped compensation for lost wages, benefits, and other remedies.
The Virginia Whistleblower Law’s goal is to encourage legitimate whistleblowing and protect employees who have complained about alleged violations of law. The difference between the new Virginia law and many existing whistleblower laws is the broad scope of protected activity. Any employee who complains about any perceived violation of any federal or state law to any supervisor, government body, or law enforcement official would be protected and have a potentially viable claim should they face nearly any form of reprisal.
So, what does all this mean to you as a VA employer? The net result is that employees, and therefore plaintiffs’ attorneys, can recover significantly greater amounts, making the Commonwealth a much more appealing location to bring an employment action. Now more than ever, it is critical for VA employers to abide by all employment regulations, to prevent themselves from becoming a target of such actions.
This post does not constitute legal advice and there are subtle variations in employment law as it pertains to these topics, depending on where your business operates. It is strongly suggested that you seek HR consultation or legal counsel before making decisions about policies.