The Fair Labor Standards Act of 1938 establishes, among other things, minimum wage and overtime pay requirements for non-exempt employees under the Act. It sets a nationwide floor, however, and not a ceiling. States may provide greater wage and hour protections to employees in their state than the baseline federal standards. Virginia, however, had historically only enacted the Virginia Wage Payment Act (Va. Code § 40.1-29), which governed the timing and manner in which employers were required to make payment, and relied on the FLSA standards to govern substantive overtime obligations in the state.
That all changed in the 2020/2021 Virginia legislative sessions. First, Virginia amended the Virginia Wage Payment Act in 2020 to include a private right of action, a lengthened statute of limitations, and significantly increased damages. That was followed up in 2021 by the enactment of the first ever stand-alone overtime law in the state: the Virginia Overtime Wage Act or VOWA (Va. Code § 40.1-29.2). The Virginia Overtime Wage Act, in conjunction with the Virginia Wage Payment Act amendments, dramatically increased the overtime pay requirements in Virginia, including: (1) providing a private right of action under state law for overtime violations; (2) increasing the amount and type of overtime damages available; (3) extending the statute of limitations to three years; (4) limiting traditional overtime exemptions; and (5) changing the regular rate formula for paying overtime. Moreover, certain sections of the Virginia Overtime Wage Act were ambiguous or in tension with other provisions, and questions amongst practitioners proliferated.
Virginia Returns to its Prior Federal Standards (effective July 1, 2022)
Enter House Bill (HB) 1173, which passed both houses of the state legislature and was signed by Governor Glenn Youngkin on April 11, 2022. In almost all regards, HB 1173 returns Virginia, effective July 1, 2022, to the overtime standards that governed prior to the enactment of the Virginia Overtime Wage Act. HB 1173 deletes the substantive section of “employer liability” in VOWA and largely replaces it with a simple restatement of FLSA governance, including that “for the purposes of this section, ‘employer’ and ‘employee’ shall have the meanings ascribed to them under the federal Fair Labor Standards Act and all applicable exemptions, overtime calculation methods, methods of overtime payment, or other overtime provisions within the federal Fair Labor Standards Act and any attendant regulations, guidance, or rules shall apply.”
Key Takeaways from Virginia’s New Overtime Law (HB 1173)
- Traditional Overtime Exemptions Are Available Again in Virginia. By replacing the substantive law provisions of VOWA with an FLSA restatement, the state has generally realigned its overtime exemptions with the FLSA again.
- The Fluctuating Workweek Method of Calculating Overtime is Back. Traditional FLSA regular rate principles—including those governing a fixed or salaried payment to employees working a fluctuating workweek of hours—have returned. The fluctuating workweek method of paying overtime had been effectively eliminated by VOWA.
- Statute of Limitations/Damages Have Returned to FLSA Standard. HB 1173 appears to return Virginia to the traditional FLSA statute of limitations (two years generally with three years in the case of a willful violation) and the traditional FLSA remedies of back wages, liquidated damages, and reasonable attorneys’ fees available in the same manner as under the FLSA.
- Some State and Federal Discrepancies Remain. The HB 1173 revisions do leave some wage and hour changes of recent years behind.
- Minimum wage increases remain. HB 1173 does not address minimum wage at all. The Virginia Minimum Wage Act amendments enacted in 2020 remain in effect, including the minimum wage increase set to take effect in 2023.
- Employees of derivative air carriers are eligible for overtime pay. This is the one exception to the return of traditional FLSA exemptions discussed above. HB 1173 explicitly includes a provision titled “Overtime for certain employees” that continues to require overtime pay under state law to employees of derivative air carriers under the national Railway Labor Act.
- Employees have a private right of action. While adopting federal standards, HB 1173 continues to allow employees the right to bring a private right of action under existing Virginia law concurrent with the employee’s right of action under federal FLSA law.
- There is potential for greater liability. Because the closely-related Virginia Wage Payment Act substantive amendments remain, there is an open question as whether a viable overtime claim might be shoehorned into the Virginia Wage Payment Act by characterizing it as an employer’s failure to timely pay wages.