New Employment Laws in Virginia Increase Employer Liability Exposure

July 21, 2020

On July 1, 2020, new laws went into effect in Virginia that drastically change the employer-employee relationship in the areas of:

 

  • employment discrimination,
  • non-competition agreements,
  • wage and hour laws, and
  • worker classification.

 

Every employment action employers take from July 1, 2020, forward must take these new laws into consideration.

 

 

EMPLOYMENT DISCRIMINATION

 

THE VIRGINIA VALUES ACT

 

See Virginia Code Sec. 2.2-3900 – 2.2-3909

 

(Effective July 1, 2020)

 

The new Virginia Values Act (“VVA”) significantly increases an employer’s exposure for employment discrimination claims by expanding the coverage of the Virginia Human Rights Act (“VHRA”), creating new state causes of action for discrimination, and expanding available remedies. For several significant reasons discussed below, employees may find these new state claims more attractive than the remedies provided under traditional and more familiar Title VII and other federal EEO remedies. Because these new rights extend beyond current federal rights it is likely that employees will immediately avail themselves of these new state court discrimination claims against employers across the Commonwealth.

 

Expanded Employer Coverage + New Types of Prohibited Discrimination

Previously, the VHRA only covered employers with between 6 and 14 workers (age discrimination complaints under the VHRA covered employers with between 6 and 20 workers) and prohibited only discriminatory discharge or termination (as opposed to other types of adverse job action claims). Remedies were limited and not as attractive as those provided by Title VII and other federal EEO laws.

 

The VVA expands the coverage of the VHRA to include:

  • A private right of action with unlimited compensatory damages and attorneys’ fees against employers with 6-14 employees for discriminatory discharge.
  • A private right of action against employers with at least 15 employees (or 20 in the case of age discrimination) for any form of discrimination causing an adverse action, not just discharge, as well as unlimited compensatory damages and attorneys’ fees.

 

In addition, the VHRA also now covers:

  • Employment agencies
  • Labor organizations
  • School boards
  • State agencies and other public entities
  • Places of public

 

The VVA expands the definition of actionable adverse action under the VHRA to include:

  • Any adverse employment action, including discharge, wage disparity, failure to promote, failure to pay bonuses, denial of opportunities, requiring an employee to take leave, etc.
  • Refusing to hire or otherwise discriminating against an employee or applicant.
  • Publishing discriminatory advertisements or otherwise suggesting a preference based on protected characteristics.

 

Expanded Protected Classes under the Virginia Human Rights Act

Previously, the VHRA prohibited only discriminatory discharge of an employee on the basis of:

 

  • Race
  • Color
  • Religion
  • National Origin
  • Sex
  • Age (40 or older)
  • Pregnancy, childbirth, or related medical conditions
   
   

The VVA expands the protected classes under the VHRA to also include discrimination based on:

  • Sexual Orientation” – defined as “a person’s actual or perceived heterosexuality, bisexuality, or homosexuality.”
  • “Gender Identity” – defined as “the gender-related identity, appearance, or other gender-related characteristics of an individual, with or without regard to the individual’s designated sex at birth ”
  • Veteran Status

 

And clarifies that discrimination “on the basis of:”

  • Pregnancy, Childbirth or Related Medical Conditions includes “a condition that may result in the feeding of a child directly from the breast or the expressing of milk from the breast”
  • Race” includes “because of or on the basis of traits historically associated with race, including hair texture, hair type, and protective hairstyles such as braids, locks, and twists”

 

Reasonable accommodations due to pregnancy, childbirth, and related medical conditions

Similar to requirements under the Americans with Disabilities Act (“ADA”), Virginia employers must accommodate applicants and employees who are experiencing pregnancy, childbirth, or related medical conditions (including lactation) unless doing so would present an undue hardship.

  • Employers with 5 or more employees must engage in a timely good faith interactive process with employees who request such reasonable accommodations to determine whether the requested accommodation is reasonable and if not, to discuss alternative accommodations. Virginia Code § 2.2- 3909(C).
  • An employee can file a lawsuit in state court for failure to provide such reasonable accommodations under the new provisions in the VHRA without first filing a claim with the Virginia Division of Human Rights (“VDHR”) and exhausting administrative remedies.

 

Lower Burden of Proof?

The VVA also appears to have lowered the burden of proof for state law discrimination claims. The statute provides that it is unlawful for an employer to use a protected category (except as otherwise provided) as “a motivating factor for any employment practice, even though other factors also motivate the practice”. If Virginia courts adopt the federal law on motivating factor, this means that even if an employer has a legitimate non-discriminatory reason for an adverse employment action, the employee could still prevail if they can show that their membership in a protected class was a motivating factor in the decision. (As opposed to the discrimination being the determinative factor.)

 

 

Increased Remedies and Possible Damages

Previously, the VHRA allowed an employee who won to collect:

  • up to 12-months’ of back pay
  • prejudgment interest
  • attorneys’ fees, capped at 25% of owed back pay

 

The VVA expands available damages under the VHRA to include:

  • Unlimited compensatory damages
  • Punitive damages (capped at $350,000 in Virginia)
  • Attorneys’ fees and costs
  • Temporary and permanent injunctive relief

 

Reason Why State Court May Now Be a More Attractive Venue than Federal Court

Title VII (race, color, religion, sex, national origin) applies to employers with 15 or more employees and the Age Discrimination in Employment Act applies to employers with 20 or more employees. (Note that the new VHRA at §2.2- 3905(B) does not include disability in the list of protected characteristics for unlawful employment practices. Therefore disability claims are excluded from the changes noted in this Alert. It is not known whether or not disability will be added as a protected class to VVA during the emergency legislative session in August 2020.)

The VHRA now applies to discriminatory discharge claims for employers with 6-14 employees, and to discharge and other adverse job actions for employers with 15 or more employees (or 20 in the case of age discrimination based on the expanded protections listed above.) (Note that for now, it does not apply to disability claims.)

Once in state court, the employee has the advantage of the following:

  • No federal combined damage cap on compensatory and punitive damages based on company size. In Virginia, there is no cap on compensatory damages. Punitive damages are capped at the highest level of $350,000.
  • No depositions may be used for summary judgment in state court and summary judgment is difficult to obtain. In federal court, many discrimination cases end at summary judgement
  • A motivating factor burden of proof as opposed to a determinative factor

 

Exhausting Administrative Remedies

An employee pursuing a claim under the VVA must file an administrative claim with the VDHR and receive a right to sue letter prior to filing a lawsuit under the expanded VHRA.

  • EXCEPT: Employees alleging failure to provide a reasonable accommodation due to pregnancy, childbirth, or related medical conditions under the VHRA may file their claim in state court without exhausting administrative remedies
  • It is not yet clear whether the VDHR has the authority to, or will in its discretion, issue early right to sue letters upon request of an employee who files a complaint. As it stands, the employee may be required to wait up to the full 180 days for the VDHR to conclude its investigation

 

Posting of Notice Requirements

Employers must post information about the prohibition on discrimination and the right to reasonable accommodation related to pregnancy, childbirth, or related medical conditions in a conspicuous location and in the company’s Employee Handbooks not later than October 29, 2020. Employers must provide notice of rights related to pregnancy, childbirth and related conditions to employees within 10 days of being notified of the employee’s pregnancy.

 

EMPLOYER ACTION ITEMS

  • Review and revise existing non-discrimination policies to include new protected classes.
  • Ensure a robust internal complaint procedure is in place.
  • Disseminate the new/revised policies to employees and obtain acknowledgments.
  • Post information about the prohibition on discrimination based on pregnancy and related medical conditions.
  • Train supervisors and managers on the new laws.
  • Review termination procedures to ensure compliance with the law.

 

 

 

NEW WHISTLEBLOWER/NON-RETALIATION PROTECTIONS

 

New Virginia Code Sec. 40.1-27.3 (Effective July 1, 2020)

This new Virginia statute creates a private cause of action for employees who believe their employer retaliated against them for engaging in “protected activity.” The new law significantly expands the definition of “protected activity” from existing protections to now include employees who in good faith complain to supervisors that they believe the employer is doing something unlawful, participate in investigations of their employer, or who refuse to complete tasks because they believe them to be unlawful. Additionally, this law significantly expands the types of employment actions that may be considered retaliation to include any form of discipline or penalty. Employers must pause and consider these new protections before disciplining or discharging an employee who refuses to carry out an employer’s order or who complains about the employer’s conduct– regardless of how the employer feels about the validity of the complaint.

 

Protected Activity Now Includes

  • Reporting a violation of any federal or state law or regulation to a supervisor or to any governmental body or law-enforcement official. For example, if an employee complains about not receiving money for leave taken under the Family First Coronavirus Response Act (emergency paid leave and emergency family and medical leave) and they are fired soon after, they may claim retaliation under this statute.
  • Refusing an employer’s order to perform an action that violates any federal or state law or regulation and the employee informs the employer that the order is being refused for that reason.
  • Refusing to engage in a criminal act that would subject the employee to criminal liability.
  • Complying with a request by a governmental body or law-enforcement official to participate in an investigation, hearing, or inquiry.
  • Providing information to or testifies 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.

 

Broad Prohibition against Retaliation (includes any discipline)

An Employer may not discipline, penalize, discharge, discriminate, or threaten to discharge/penalize/discipline any employee because he/she engaged in protected activity.

 

Private Cause of Action

Employees have one year from the date of the alleged retaliation to bring a civil claim against the employer in state court. We anticipate Plaintiff’s counsel taking advantage of these new protections in demand letters and lawsuits immediately.

 

EMPLOYER ACTION ITEMS

  • Ensure the employer maintains a formalized and mandatory internal complaint process that includes anti- retaliation language.
  • Disseminate the new/revised mandatory complaint policy to employees and obtain acknowledgments.
  • Train supervisors and managers on this new law.
  • Require supervisors and managers to report to Human Resources all employee complaints and refusals that may be considered protected activity.
  • Prior to any discipline or termination for an employee who complained or refused work, consult legal counsel to ensure that the discipline or termination does not constitute unlawful retaliation.

 

NON-COMPETITION AGREEMENTS

 

New Virginia Code Sec. 40.1-28.7:8

 

(Effective July 1, 2020)

 

Prohibited Covenants for Low-Wage Workers

Virginia now prohibits the use, enforcement, or threatened enforcement of “covenants not to compete” against low-wage workers. In addition, non-solicitation agreements that restrict a former employee from providing services or products to a customer of the employer who initiates contact with the employee are prohibited.

The statute expressly permits the creation and enforcement of “nondisclosure agreements” intended to prohibit the taking, misappropriation, or threatened misappropriation or disclosure of trade secrets and other proprietary or confidential information.

“Low-wage employee” is defined as:

  • An employee who earns less than the average weekly wage (“AWW”) of the Commonwealth. (The Virginia Employment Commission determines the AWW prior to the start of each calendar year.  The current AWW is $1,195/week (or $62,140 per year) as of January 1, 2021.  A notice stating the current AWW is posted on the Virginia Department of Labor and Industry website);
  • Interns, students, apprentices, and trainee; and
  • Independent contractors who earn less than the median hourly wage set for all occupations as set by the US Bureau of Labor Statistics, which was $19.63 per hour in 2019.

Employees whose “earnings are derived, in whole or in predominant part, from sales commissions, incentives or bonuses” are expressly excluded from the definition of “low-wage employee.”

 

New Cause of Action

The statute creates a private right of action in state court in which an employee may seek:

  • a declaration that a non-compete is void, and
  • an award of damages, including lost wages, liquidated damages, attorneys’ fees and costs, including expert witness fees.

In addition to potential damages, employers found in violation of this statute may be subjected to a civil fine of up to $10,000 per occurrence.

Claims may be asserted against “any former employer or other person that attempts to enforce a covenant not to compete” in violation of the statute, which suggests managers, supervisors, and HR directors could be held personally liable.

Claims must be filed within 2 years of the later of (i) the date the covenant not to compete was signed; (ii) the date the low-wage earner learns of the covenant; (iii) the date the employment relationship is terminated; or (iv) the date the employer takes steps to enforce the covenant not to compete.

 

EMPLOYER ACTION ITEMS

  • Review employee non-compete agreements and wage rates to determine whether any fall within the prohibition.
  • Review and revise the non-solicitation and non-disclosure agreement.
  • Train managers and supervisors on the potential for individual liability.
  • Post a copy of the law or a summary of it wherever other required notices are posted.

 

WAGE AND HOUR LAWS

Amended Virginia Code Sections 40.1-28.8 – 40.1-28.12

(Effective May 1, 2021 – delayed by Governor Northam due to COVID-19)

 

Increased Minimum Wage

The Virginia minimum wage will increase to $9.50 an hour for qualifying employees on May 1, 2021. The minimum wage will increase on January 1st of each of the following years as follows:

  • 2022: $11.00 per hour
  • 2023: $12.00 per hour
  • 2025: $13.50 per hour
  • 2026: $15.00 per hour

The increases in 2025 and 2026 must be reenacted by the General Assembly by January 1, 2024. The Commissioner of Labor and Industry must establish the adjusted state hourly minimum wage for the following year by October 1, 2026 (or beginning October 1, 2024, if the increases for 2025 and 2026 are not reenacted by the General Assembly) and every year thereafter.

 

Amended Virginia Code Section 40.1-29 (Effective July 1, 2020)

 

Private Cause of Action for Failure to Pay Wages

The Virginia Wage Payment Act now includes a private right of action for failure to pay wages. Employees can sue individually or collectively using the procedures available under the Fair Labor Standards Act. Available remedies include:

  • Wages owed
  • Liquidated damages
  • Prejudgment interest
  • Attorneys’ fees and costs
  • If a court finds the employer “knowingly failed to pay wages,” the court must award “triple the amount of wages due and reasonable attorney fees and costs. ”

 

New Virginia Code Section 40.1-33.1 (Effective July 1, 2020)

 

This new statute prohibits employers from discharging or otherwise retaliating against employees who file a complaint or institute a proceeding under the Virginia Wage Act, or testify in such a proceeding.

 

EMPLOYER ACTION ITEMS

  • Do not offset against an employee’s paycheck without express written permission from the employee.
  • Confirm that policies and practices do not prohibit employees from discussing wages.
  • Train supervisors about the prohibition on retaliation.

 

 

 

EMPLOYEE CLASSIFICATION

 

New Virginia Code Section 40.1-28.7:7

(Effective July 1, 2020)

Several new statutes went into effect beginning on July 1, 2020, relating to the classification of employees and independent contractors. These statutes provide a private right of action for misclassification; create a presumption that all people working for pay in Virginia are employees, not independent contractors; and establish joint and several liability for construction contractors and subcontractors.

Please see the Eckert Seamans Legal Update, “New Virginia Laws Seek to Convert Independent Contractors to Employees” for additional information and analysis of these new laws.

 

PARTIAL BAN THE BOX LAW

 

New Virginia Code Section 19.2-389.3

(Effective July 1, 2020)

This new law decriminalizes “simple possession of marijuana.” It is still unlawful to possess marijuana under Section 18.2-250.1 of the Virginia Code, however those who violate this section will be subject only to a civil penalty of no more than $25.00. From an employment law aspect, the new law prohibits employers from requiring any job applicant (during an interview or otherwise) to disclose information relating to any arrest, criminal charge, or conviction for simple possession of marijuana (possessing one ounce or less without intent to distribute See Va.

Code §§18.2-248.1 and 18.2-250.1). When answering questions relating to any arrests, criminal charge, or convictions, employees have a statutory right not to include references to or information about simple possession of marijuana. Such information will not be made available in the Virginia Central Criminal Records Exchange for public inspection, thus employers may not use a third-party consumer agency to inquire about simple marijuana possession arrests, charges, and/or convictions while conducting criminal history checks. If employers willfully violate this law, they will be guilty of a Class 1 misdemeanor for each violation. Note that this law does not apply to the distribution of marijuana, nor the intent to distribute marijuana.

 

 

Click here to view a downloadable PDF of the Legal Update.

 

 

This Legal Update is intended to keep readers current on developments in the law. It is not intended to be legal advice. If you have any questions, please contact authors Karen Elliott, Brendan Horgan, Annemarie DiNardo Cleary, or any other attorney at Eckert Seamans with whom you have been working.

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