Seven Things That Employers Need to Know About Virginia’s New Overtime Wage Act

Virginia recently amended its wage law in a very significant manner by enacting the Overtime Wage Act (Act). The Act took effect on July 1, 2021.

Key takeaways from the amendment include the following:

  1. The Act has changed the manner in which the regular rate of pay is calculated for salaried, non exempt employees. Under Section 40.1-29.2(B)(2) of the Virginia Code, the regular rate of pay for salaried, non exempt is now one fortieth (1/40th) of all wages paid in a particular workweek.
  2. Consequences of the change in the calculation of the regular rate for salaried, non exempt employees. The practical effect of this change is that the so-called Fluctuating Work Week (FWW) method, which exists under the (federal) Fair Labor Standards Act (FLSA), whereby an employer may calculate overtime at one half of the regular rate (as opposed to time and a half as otherwise required under the FLSA), is not legal in Virginia.
  3. The Act permits employees to bring collective actions. Employees may bring overtime claims individually, as well as also jointly with other aggrieved employees, or on or behalf of similarly situated employees as a collective action consistent with the collective action procedures of the FLSA.

To continue reading this article, click here: https://www.lerchearly.com/news/seven-things-that-employers-need-to-know-about-virginias-new-overtime-wage-act.

Voluntary Acceptance of a Transfer May Waive Employees’ Claims in Maryland and Virginia

Recognition of “Constructive Demotion” Claims Seems Imminent.

Lauri ClearyLauri Cleary

In October, the Fourth Circuit Court of Appeals confirmed in Laird v. Fairfax County, Virginia, that an employee voluntarily accepting a lateral transfer to another position (there, to settle a disability discrimination claim) may not be able to establish discrimination or retaliation just because the new job is not all she had hoped.

To make out a viable claim, the employee must suffer an “adverse employment action” such that the transfer resulted in “a significant detriment” to the employee. Whether an employee’s dissatisfaction rises to the level of “significant detriment” is a factual issue determined on a case-by-case basis.

A transfer must cause a “significant detriment” to be actionable

After working in the new position for some months, Ms. Laird came to believe she had been demoted. She found her new position “boring” and to be a “thinkless job, just data entry,” and hurt her potential for future promotion.

She sued the County for discrimination and retaliation under the Americans with Disabilities Act. The federal trial judge in Alexandria entered judgment against her, finding her disappointment, however genuine, was not significant enough to establish a significant detriment.

After reviewing all facts anew, the Fourth Circuit Court of Appeals agreed. Offering no real guidance on what establishes a “significant detriment,” the Court of Appeals discussed what does not. In her new job, Ms. Laird received the same compensation, asked for and received changes to the new title and duties, and received additional accommodations of her disability.

The Court noted near the end of its opinion that she had abandoned her argument that intolerable discriminatory conditions in her original job had compelled her to accept a transfer—in essence that she was forced to accept a demotion. Having waived that argument, she could no longer claim that the transfer itself had been discriminatory or retaliatory.

A transfer that is not “voluntary” may be a “constructive demotion”

Had she not abandoned her “constructive demotion” argument, Ms. Laird may have prevailed by claiming acceptance of the transfer had not been “voluntary.”

The majority did not address that potential, but a member of the three-judge panel did in a concurrence. Observing that the DC Circuit (and every other circuit court of appeals to address the issue) has recognized constructive demotion claims, and noting that this circuit already has recognized claims for “constructive discharge” (for employee left with no option but to resign), the concurrence concluded: “Logic dictates that if a demotion can constitute a constructive discharge, then a constructive demotion can similarly constitute a constructive demotion.”

Thus, as in DC, an employee who can allege a work experience so intolerable as to leave no option but to accept a transfer likely will have a viable claim for constructive demotion claim in MD and VA.

Employer takeaways

Making a lateral transfer of a (current or potential) disability claimant to settle claims of discrimination and/or retaliation may not be an easy panacea. The transfer must be both “voluntary” and it not trade one “significant detriment” (discrimination or retaliation) for another (a significantly inferior position).

For more information, contact Lauri at 301-657-0176 or lecleary@lerchearly.com.

Virginia Ban on Non-Competes for “Low” Wage Employees

Josh SchmandJosh Schmand

Along with a number of other employer friendly laws passed this summer (Values Act and Wage Theft Law), Virginia has joined Maryland in prohibiting non-compete agreements with certain “low” wage workers.

What is a non-compete agreement?

Under the new law, a “covenant not to compete” or non-compete agreement is an agreement between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his/her former employer.

Which employees are considered “low” wage earners?

Who is a “low” wage earner is a bit of a moving target. The new law defines a “low-wage employee” as an employee whose average weekly earnings during the previous 52 weeks (or if an employee worked fewer than 52 weeks, the average weekly earnings for the number of weeks that the employee worked) are less than the average weekly wage in the Commonwealth as determined by the Virginia Employment Commission (VEC). The VEC may issue a new average weekly wage as frequently as every quarter; recently the VEC calculated the average wage as $1,204 per week or $62,608 per year. This means that a non-compete that was enforceable when entered could violate the new law when employers attempt to enforce it if the employee now qualifies as a “low” wage earner.

Interns, students, apprentices, or trainees are all considered “low” wage earners. As are independent contractors making an hourly rate less than the median hourly wage for all jobs over the past year in the Commonwealth, as determined by the Bureau of Labor Statistics of the U.S. Department of Labor, which was recently calculated at $20.30 per hour.

The new law does not cover employees that earn their salary predominantly through sales commissions, incentives, or bonuses.

What is prohibited by the new law?

Employers are prohibited from entering into, enforcing, and even threatening to enforce non-compete agreements with any “low” wage employee from July 1, 2020 going forward. This means that non-compete agreements that were entered into before July 1, 2020 are safe, but employers should consult counsel before enforcing or threatening to enforce those agreements.

By its terms, the new law does not apply to similar contracts, such as confidentiality or nondisclosure agreements, that protect employers’ trade secrets and confidential or proprietary information.

The new law leaves some grey area regarding when it applies to non-solicit agreements with customers, so employers should review client non-solicitation agreements with counsel to ensure compliance.

The new law does not address other types of employment restrictions, such as prohibitions against the solicitation of employees.

What are the penalties?

Employers are subject to a civil penalty of $10,000 for each violation of the new law, as well as private rights of action. In addition to lost compensation that can be awarded in a lawsuit, a “low” wage employee is entitled to recover reasonable costs, including attorneys’ fees, from employers that enter into, enforce, or threaten to enforce a non-compliant non-compete agreement.

Are there other requirements for employers?

Employers must post a copy or summary of this new law with its other required posters. Failure to comply with the posting requirements will subject employers to a written warning for the first violation, a penalty of up to $250 for a second violation, and a penalty of up to $1,000 for a third and each subsequent violation.

Is D.C. next?

D.C. has introduced a similar ban on non-competes for low wage employees.

For more information, contact Josh at 301-347-1273 or jcschmand@lerchearly.com.

Are DMV Employers Required to Give Employees Time Off to Vote? It Depends.

Josh SchmandJosh Schmand

With Election Day around the corner on November 3, 2020, and early voting ongoing, employees may need time off from work to vote.

Federal law does not require employers to give employees time off from work to vote, but the local jurisdictions have varying voting leave requirements. Here’s what employers need to know about giving employees time off to vote in D.C., Maryland, and Virginia:

Time Off to Vote in D.C.

On April 27, 2020, the District of Columbia enacted the Leave to Vote Amendment Act of 2020, which went into effect on October 1, 2020, just in time for the 2020 election season. The Act gives all D.C. employees the right to at least two hours of paid leave off to vote.

This means that paid voting leave is only available to employees who are voting in person. The leave can be used for either an election held in the District if the employee is eligible to vote in the District or in an election held in the jurisdiction (such as Maryland or Virginia) in which the employee is eligible to vote.

Employers may ask employees to submit the request for paid leave a reasonable time in advance of the date the employee plans to vote and to specify the hours during which employees can take paid leave to vote, including requiring employees to vote early instead of on Election Day or to vote at the beginning or the end of a shift. Employers may not interfere with, restrain, or deny any attempt employees make to take paid leave to vote under the Leave to Vote Act or retaliate against employees for taking paid leave to vote.

The Leave to Vote Act requires employers to post notice of the voting leave requirements in a conspicuous location and on their websites. A notice suitable for posting in the workplace can be found here.

Voting Leave in Maryland

Every employer in Maryland must allow employees at least two hours of paid leave off to vote on Election Day in order to cast a ballot. Like in D.C., this means that paid voting leave is only available to employees who are voting in person.

All employees in Maryland are eligible for paid voting leave if they claim to be registered voters in Maryland and if they do not have two hours of continuous off-duty time during the time that the polls are open. Employees are not eligible for paid voting leave if they have two consecutive nonworking hours while the polls are open.

Employers may require that employees provide written proof that they voted or attempted to vote. The paid voting leave law does not specify whether employers may designate the hours during which employees may take paid leave to vote. The law also does not specify any obligations for employers to inform employees of their right to paid voting leave.

Election Officer Leave in Virginia

Virginia does not have voting leave laws requiring time off (paid or unpaid) for employees to vote.

However, Virginia employers should be aware that they are obligated to provide election officer leave. An election officer is a person appointed by an electoral board to serve at a polling place for any election.

Requests for election officer leave must be made reasonably in advance of Election Day, and the leave does not need to be paid. Employees that serve four or more hours (including travel time) as election officers on Election Day cannot be required to start a shift on or after 5 p.m. that day or before 3 a.m. the day after service.

Voting Leave Policies

The voting leave requirements outlined above are the minimums required by applicable laws, and employers, even those in Virginia, can always amend their policies to provide additional paid voting leave as necessary. Employers should review all requests for voting leave consistent with established policies and applicable laws.

At a minimum, employers should review and modify their leave policies now to ensure compliance with the amended D.C. Leave to Vote Act and to provide employees with their required voting leave.

For more information, contact Josh at 301-347-1273 or jcschmand@lerchearly.com.

Business Interruption Insurance

To Claim or Not to Claim?

Lauri ClearyLauri Cleary

Now that we are several months into the COVID-19 experience, most businesses have suffered some type of interruption, and many have suffered appreciable income loss.

The latter group may have considered submitting lost income claims on their business insurance policies. Those with offices, warehouses or any other physical premises (and many with only a virtual presence) likely have an all risk “CGL” (commercial general liability) insurance policy. These policies work by process of elimination or “exclusion” rather than “inclusion,” covering more than a narrow group of selected risks by covering any and all risks not expressly excluded–either by a narrow definition of the injury or loss that triggers coverage or express exclusion of certain causes of loss. They are “all risk” in that they insure against covered risks for covered losses.

Claims inquiries to many agents and brokers are met with the pessimistic advice that there likely is no coverage and will be no payout for COVID-19 losses. Many have been counseled not to bother submitting a claim. Given the new burdens the pandemic has placed on businesses trying simply to function, the temptation to forego an exercise in futility is understandably strong. But it should be resisted, and here’s why.

The Case for Making the Claim

As courts and legislatures begin to see and address claim denials, rays of hope are piercing the darkness.

First, and as always, a basic legal principle requires that insurance policies be interpreted in favor of the insured business and against the insurer, whose policy language is at issue. Initial court cases have begun to expose weak spots in the policy language armor insurers donned starting in 2008, after outbreaks of SARS and H1N1 inspired global pandemic fears. Before then, few businesses other than medical or biotech firms had policies excluding bacterial or viral diseases, as those risks were only addressed when they were inherent in the insured’s business.

Once hotel chains racked up huge SARS losses, and their insurers suffered huge verdicts, exclusions were rushed into policies for all businesses. But these exclusions, like all policy language, are narrowly interpreted against the insurer. Exclusions for “bacteria,” “virus,” “viral pandemic,” and other communicable disease sources are not interchangeable: a bacteria exclusion will not cover COVID-19 or any other virus (and vice versa), to justify denial for lack of a “covered cause of loss.”

Another ready refuge for insurers seeking to deny coverage is found in policy definitions of “covered loss.” That language, too, is under strict scrutiny in the courts. The issue is whether there must be physical damage or harm to property owned or rented by the business (or, in contingent income loss policies, to property of a customer or supplier or venue that draws customers to the business); and, if so, what constitutes “damage” or “harm” that may cause a “covered loss.”

Interpreting COVID-19

While courts in the past have interpreted policies to require a permanent structural change to physical property, the COVID-19 issue is whether contamination that does not effect a structural change, but adds a patina of toxicity, might be sufficient. There are apt analogies to be drawn from cases finding coverage for accidental chemical releases requiring decontamination to support an argument that property damage occurs wherever COVID-19 is present. Again, the policy language is paramount, and those providing coverage for “loss” may be broadly interpreted to include “loss of use” rather than only “damage” or “harm” to property.

Policies that interchange these words in other coverage parts may be interpreted against the insurers who argue a more limited meaning in policies that do not contain express exclusions of losses caused by viral pandemics or governmental shutdown orders. A recent D.C. Superior Court, case now headed to the D.C. Court of Appeals, demonstrates this well (Rose’s 1, LLC, et al. v. Erie Insurance Exchange, D.C. Superior Court, August 6, 2020).

In addition, since the onset of COVID-19 in March, state legislatures anticipating coverage denials in 10 states and the District of Columbia have been exploring ways to expand coverage under policies that otherwise would provide none. Most legislative measures would not simply declare coverage to exist where it did not otherwise. Rather, they would require insurers to offer such coverage for an additional premium. This approach balances the insureds’ need with concerns that the insurance industry not be bankrupted by COVID-19 loss payouts.

If nothing else, the judicial and legislative indications strongly support taking the time to submit a lost income claim under any policy that arguably affords any type of business interruption or lost income coverage, however limited.

For more information, contact Lauri at 301-657-0176 or lecleary@lerchearly.com.

Welcome to Employment Edge

On behalf of Lerch Early & Brewer’s employment and labor attorneys, we welcome you to Employment Edge, our firm’s new blog focused on the issues impacting employers throughout the Washington, DC Metropolitan Area and beyond.

For years we have connected with you through workshops, seminars, newsletters, and in various other in-person and digital ways (especially in the time of COVID-19). Now, we are excited to bring you relevant information about the most important topics to your business or organization through our Employment Edge blog.

Here, you will find content written by our experienced employment and labor attorneys on a multitude of matters including COVID-related workplace rules; updates on new Maryland, Virginia, and District of Columbia employment related laws; new court decisions and legal trends which impact employers; and a myriad of achievable best practices for complying with the ever changing legal landscape. We believe that this is just the tip of the iceberg. We look forward to continuing to anticipate the issues which we believe you will find important in the future while being responsive in real time to issues affecting you now.

Please visit our website (www.lerchearly.com) where you will find more information about our practice and our attorneys, as well as valuable articles and timely and helpful information.

Please send us your feedback, including issues and topics which you would like for us to address in future blog posts.

We look forward to hearing from you and to seeing you on Employment Edge soon!

Sincerely,

Marc Engel and Julie Reddig
Co-chairs, Employment/Labor Practice