In latest edition of The Wright Toolbox:
- Virginia’s New Overtime Wage Act – read now
Virginia’s New Overtime Wage Act
For employers and employees asking questions about overtime pay in Virginia, the answer has been to refer to the federal guidelines pursuant to the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. On July 1, 2021, that all changes as Virginia’s new Overtime Wage Act goes into effect. Both employers and employees will need to be familiar with the new policy, so let’s take a look at the new Virginia law.
First and foremost, the Act requires an employer to pay all employees who work in excess of 40 hours in any given workweek at least one and a half times the employee’s “regular rate.” This basic formula is the same one you will see under the FLSA. However, the Virginia statute specifically defines how an employee’s “regular rate” is to be calculated. Employers must pay attention to these calculations because they differ from the FLSA.
For employees paid on an hourly basis, the “regular rate” is the hourly rate of pay plus other wages paid for that week like commissions or non-discretionary bonuses, minus any FLSA-recognized exclusions. You then divide those total wages by the total number of hours worked in the workweek. That “regular rate” gets multiplied by the number of hours worked over 40 to arrive at the amount of overtime paid owed.
For salary employees non-exempt from overtime, the “regular rate” under the Act is one-fortieth of all wages paid for a given workweek, which again includes commissions, non-discretionary bonuses, etc. Therefore, the employer will take all of the salaried employees wages earned for the workweek and divide it by 40. That rate will be multiplied by the hours worked over 40 for that workweek. Essentially, the Virginia Act imposes a separate and new “regular rate” as defined by the statute that is used to calculate overtime. For salaried employees especially, this may be different than the hourly rate the employee uses to calculate regular wages.
The Act creates a three-year statute of limitations for aggrieved employees to bring causes of action against employers. If an employer fails to pay an employee overtime that is due under the Act, the employee, individually or collectively with other employees, can sue the employer to recover unpaid wages. If successful, the employee can recover the unpaid wages, an equal amount of the unpaid wages as liquidated damages (so double wages total), plus prejudgment interest and reasonable attorney’s fees, costs and expenses. If the employer “knowingly” fails to pay the employee wages owed, he or she can recover triple wages plus reasonable attorney’s fees, costs and expenses.
Like any new law, it will take time and almost certainly some litigation to tease out the new provisions. For now, while the Act looks similar to the FLSA, it is important for Virginia employers to understand how Virginia expects them to calculate overtime pay for non-exempt employees. In that respect, the statute sets out specific calculations, and employers should understand them and follow them very closely. If you have questions regarding this wage act or other aspects of employee compensation, contact the Labor and Employment team at Wright, Constable & Skeen.