Prepare for an Increase in Virginia Wage and Hour Claims due to Amendments to the Wage Payment Act
Virginia employers could face a surge of new wage and hour claims if they don’t comply with recent amendments to the Commonwealth’s Wage Payment Act.
While Virginia employers are rightly focused on when and how to emerge from the pandemic shutdown, there are new employment laws going into effect on July 1, 2020 that they should heed. Another is the Virginia Values Act, which broadened anti-discrimination protections.
The amendments to the Wage Payment Act are an effort to ensure that employees are properly paid the wages owed to them. Through these amendments, Virginia created a private right of action for wage theft violations and also instituted new requirements for reporting hours worked.
Nonpayment of Wages
For the first time in Virginia, employees are now able to sue their employers directly for allegedly unpaid wages. The Wage Payment Act already controlled the time and manner for employers to pay employees and allowed employees to file administrative agency claims, but did not provide employees with direct means of seeking damages for nonpayment of wages in court. Under the new “wage theft” law, employees who have not been paid the wages owed to them may sue their employers individually, jointly with other coworkers who also have not been paid, or collectively on behalf of similarly situated employees.
The wage theft law provides significant available remedies to affected employees, including recovery of wages owed, prejudgment interest of eight percent (higher than Virginia’s general six percent statutory prejudgment interest), and double damages for all violations. Those damages may increase if an employer knowingly fails to pay an employee their wages owed. An employer who knowingly fails to pay wages could be subject to triple damages and attorneys’ fees, as well as a $1,000 civil penalty per violation. The wage theft law also carries potential criminal penalties for employers who willfully and intentionally withhold wages, including felony convictions if the wages owed to an employee are more than $10,000.
The Wage Theft Law has other notable provisions, including:
- Imposing liability on general contractors for nonpayment of wages by their subcontractors in certain situations;
- Protecting employees from retaliation who sue their employer for unpaid wages or who report wage theft; and
- Expanding the Department of Labor and Industry’s right to investigate nonpayment of wage complaints.
Statement of Earnings
To aid employees in understanding the wages owed to them, the Virginia Wage Payment Act already required employers to provide each employee a written statement, by paystub or online accounting, that shows the number of hours worked during the pay period, the rate of pay, the gross wages earned by the employee during the pay period, and the amount and purpose of any deductions.
In response to uncertainty about how employers should treat exempt employees, Virginia amended its Wage Payment Act relating to the requirement for employers to report the number of hours worked by each employee (statement of earnings). Virginia has now limited the application of the statement of earnings requirement only to employees who are paid on either the basis of the number of hours worked or a salary that is less than the standard salary level adopted by regulation of the U.S. Department of Labor pursuant to the federal Fair Labor Standards Act, which is currently not less than $684 per week or $35,568 per year. The paystub or online accounting must also now include sufficient information to enable employees to determine how the gross and net pay were calculated.
This new expansion of reporting requirements and available damages for nonpayment of wages, combined with the reluctance of Virginia state courts to cutoff claims before trial through granting motions for summary judgment, will likely invite a deluge of wage theft claims in state courts. Even if employers are able to avoid liability and double or triple damages and attorneys’ fees for nonpayment of wages, successfully defending a lawsuit all the way through a full trial in state court can be an expensive proposition.
Nearly all Virginia employers, regardless of size, will be affected by these amendments. Thus, the time is now for Virginia employers to review and update their policies and practices to be prepared for the July 1, 2020 effective date and to avoid liability for wage theft and earning statement violations.
Josh Schmand is a litigation and employment attorney who works on complex business, corporate, and commercial disputes, as well as employment matters, advising clients on the risks and benefits of litigation, preparing for trial when needed, and serving as a determined advocate. For more information, contact Josh at email@example.com or (301) 347-1273.