Virginia Overtime Wage Act: A Handy Guide to Overtime Protections for Virginia Employees

The Virginia Overtime Wage Act (“VOWA”) requires employers to pay covered employees overtime compensation. In some ways, the VOWA is similar to the overtime provisions of the federal Fair Labor Standards Act. In other ways, including the calculation of overtime rates for salaried employees, the availability of triple damages, and the time period for which damages can be recovered, VOWA is more powerful and beneficial to employees than the FLSA. For example, if the court finds that an employer knowingly fails to pay overtime wages to an employee in accordance with the VOWA, the court must award the employee triple the amount of overtime wages due and reasonable attorney fees and costs.

Employ Defined

Like the FLSA, the VOWA defines “employ” broadly, as “to permit or suffer to work.” VA Code § 40.1-29.2(A)

Employee Defined and Misclassification of Salaried Employees

The VOWA also defines “employee” broadly, as “any individual employed by an employer[.]” VA Code § 40.1-29.2(A). This definition specifically includes employees of derivative carriers within the meaning of the federal Railway Labor Act, 45 U.S.C. § 151 et seq. Id.

There are a few exceptions, however, to the definition of “employee.” These exceptions cover some, but not all, categories of workers who are exempt from (i.e. not covered by) the overtime provisions of the federal FLSA. For purposes of the VOWA, “employee” does not include:

(i) any individual who volunteers solely for humanitarian, religious, or community service purposes for a public body, church, or nonprofit organization that does not otherwise employ such individual; and

(ii) any person who is exempt from the [FLSA] federal overtime wage pursuant to 29 U.S.C. § 213(a)

Workers who truly fall into one of these “not an employee” categories are not covered by VOWA, but employers often make mistakes in how they classify employees. The carve-out in § 40.1-29.2(A)(ii) includes the FLSA exemptions commonly referred to as the “white collar” exemptions for workers who meet the criteria for administrative, executive, or professional exemptions. The criteria for these exemptions can be tricky, delving into the application of abstract rules to specific job duties, and employers often wrongly classify workers as meeting these exemptions simply because they are paid a salary. The notion that salaried employees are not entitled to overtime pay, merely because they receive a salary, is incorrect.

Employers who misclassify workers as “exempt” can cost the workers a great deal of income in the form of unpaid overtime compensation. Workers who believe they may be incorrectly classified as “exempt” from the overtime laws because they receive a salary should contact an employment attorney to review their situation. 

(iii) any person who meets the exemptions set forth in 29 U.S.C. § 213(b)(1) or 213(b)(11).

The exemption in § 40.1-29.2(A)(iii) includes the FLSA exemptions for motor carriers (29 U.S.C. § 213(b)(1)) and drivers and driver’s helpers making local deliveries who are paid under plans approved by DOL (29 U.S.C. § 213(b)(11)). Workers who believe they may be misclassified as exempt under any of these exemptions should contact an employment attorney. 

Employer Defined

The VOWA also defines “employer” broadly, as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” VA Code § 40.1-29.2(A).

There are a few exceptions, however, to the definition of “employer.” Under the VOWA, “employer” does not include:

  • any labor organization, other than when acting as an employer; 
  • anyone acting in the capacity of officer or agent of such labor organization; or 
  • any carrier subject to the federal Railway Labor Act, 45 U.S.C. §§ 151 through 188, except derivative carriers within the meaning of the federal Railway Labor Act.

VA Code § 40.1-29.2(A). Notably, under this definition, employers whose operations do not satisfy the enterprise coverage requirements of the FLSA may still be “employers” subject to the VOWA. Thus, the scope of “employer” covered by the VOWA is broader than that covered by the FLSA. 

Person Defined and Waiver of Sovereign Immunity

Relevant to the definition of “employer,” the VOWA defines “person” as:

an individual, partnership, association, corporation, business trust, legal representative, any organized group of persons, or the Commonwealth, any of its constitutional officers, agencies, institutions, or political subdivisions, or any public body. This definition constitutes a waiver of sovereign immunity by the Commonwealth.

VA Code § 40.1-29.2(A). Two aspects of this definition are especially notable. 

  1. It means that the VOWA can apply to individuals, such as business owners, and not just to companies. 
  1. It also means that the VOWA applies to the Commonwealth. This definition explicitly constitutes a waiver of sovereign immunity by the Commonwealth, so that state or local government employees who are not paid overtime consistent with the VOWA’s requirements may bring suit to recover their damages. 

Wages Defined and Impact on Overtime Rates

The definition of “wages” is important to the calculation of an employee’s overtime pay rate. The VOWA defines “wages” the same as that term is defined in the Virginia Minimum Wage Act, VA Code § 40.1-28.9. The VMWA defines “wages” broadly, as

legal tender of the United States or checks or drafts on banks negotiable into cash on demand or upon acceptance at full value. “Wages” includes the reasonable cost to the employer of furnishing meals and lodging to an employee if such board or lodging is customarily furnished by the employer and used by the employee.

VA Code § 40.1-29.2(A)VA Code § 40.1-28.9(A). Wages may include tips. VA Code § 40.1-28.9(B)

In short, the VOWA’s broad definition of wages means that nearly all forms of compensation, from salaries, bonuses, and commissions, to lodging and tips, must be included in calculating an employee’s regular and overtime rates of pay. The VOWA excludes from the calculation of regular and overtime rates the same forms of compensation that are excluded from the regular rate by the federal FLSA, 29 U.S.C. § 201 et seq., and its implementing regulations. VA Code § 40.1-29.2(B).

Workweek Defined

The VOWA defines “workweek” as “a fixed and regularly occurring period of 168 hours or seven consecutive 24-hour periods.” VA Code § 40.1-29.2(A). A workweek does not have to coincide with the calendar week and may begin on any day and at any hour. The VOWA provides that the beginning of the workweek may be changed if the change is intended to be permanent and is not designed to evade the overtime requirements of this section. Id.

Overtime Compensation Requirement 

The VOWA’s substantive overtime provision parallels that of the FLSA:

For any hours worked by an employee in excess of 40 hours in any one workweek, an employer shall pay such employee an overtime premium at a rate not less than one and one-half times the employee’s regular rate, pursuant to 29 U.S.C. § 207. 

VA Code § 40.1-29.2(B).

Importantly, however, the VOWA differs from the FLSA in its requirements for calculation of the regular rate of certain employees, and thus, the employees’ overtime pay rate.

Calculation of Regular Rate and Prohibition of Fluctuating Workweek Method

The VOWA provides that an employee’s regular rate shall be calculated as follows:

1. For employees paid on an hourly basis, the regular rate is the hourly rate of pay plus any other non-overtime wages paid or allocated for that workweek, excluding any amounts that are excluded from the regular rate by the federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and its implementing regulations, divided by the total number of hours worked in that workweek.

2. For employees paid on a salary or other regular basis, the regular rate is one-fortieth of all wages paid for that workweek.

VA Code § 40.1-29.2(B). These VOWA requirements prohibit employers from calculating a salaried employee’s overtime pay rate using the “fluctuating workweek” method. The fluctuating workweek method, also called “Chinese overtime” or “diminishing half-time,” involves dividing all compensation for the week by the total hours worked to get a regular rate, then paying the employee half of that regular rate for each hour of overtime. This method, which is permissible for salaried employees under the FLSA, results in salaried employees being paid less overtime compensation per hour the more hours they work. This method is outlawed by the VOWA, because the VOWA requires employers to calculate regular rates using a 40-hour workweek and to pay overtime equal to 1.5 times the regular rate. Thus, under the VOWA, the overtime rate for salaried employees does not diminish as more hours are worked. 

Virginia’s Gap Pay Act for Fire Protection and Law Enforcement Employees

The VOWA references the FLSA’s special work period rules for fire protection and law enforcement employees, located at 29 U.S.C. § 207(k). In general, those rules allow fire departments or police departments to establish a work period ranging from 7 to 28 days in which overtime need be paid only after a specified number of hours in each work period. See this prior post for a detailed explanation of those rules. Paying overtime based on these work periods can create a “gap” of uncompensated working time between the hours covered by the employee’s salary, and the hours the employee has to work to receive overtime compensation under § 207(k) of the FLSA. 

For this reason, the VOWA also references Virginia’s Gap Pay Act, VA Code § 9.1-701. That state law provides, generally, that certain fire protection and law enforcement employees must be paid overtime compensation for the “gap,” that is, “for all hours of work between the statutory maximum permitted under 29 U.S.C. § 207(k) and the hours for which an employee receives his salary, or if paid on an hourly basis, the hours for which the employee receives hourly compensation.” VA Code § 9.1-701(A)

The VOWA provides:

For fire protection or law-enforcement employees of any public sector employer for whom 29 U.S.C. § 207(k) applies, such employer shall pay an overtime premium as set forth in this section for (i) all hours worked in excess of the threshold set forth in 2[9] U.S.C. § 207(k) and (ii) any additional hours such employee worked or received as paid leave as set forth in subsection A of [VA Code] § 9.1-701.

VA Code § 40.1-29.2(C). Thus, the VOWA requires that fire protection and law-enforcement employees receive overtime compensation for both:

(i) all hours worked in excess of the threshold set forth in 29 U.S.C. § 207(k), and

(ii) any additional hours the employee worked or received as paid leave as set forth in subsection A of Virginia’s Gap Pay Act, VA Code § 9.1-701(A).

VA Code § 40.1-29.2(C)

The VOWA further provides that compliance with 207(k) and the Gap Pay Act is compliance with VOWA’s overtime requirements. It states:

No agency, institution, political subdivision, or public body that complies with the requirements of 29 U.S.C. § 207(k) and § 9.1-701 shall be deemed to have violated subsection B [of VOWA] with respect to fire suppression or law-enforcement employees covered by such statutes.

VA Code § 40.1-29.2(E).

Exemptions and Affirmative Defenses

The VOWA allows employers to assert some, but not all, of the exemptions available under the federal FLSA. 

An employer may assert an exemption to the overtime requirement of this section for employees who meet the exemptions set forth in 29 U.S.C. § 213(a)(1) or for employees who meet the exemptions set forth in 29 U.S.C. §§ 213(b)(1) or 213(b)(11).

VA Code § 40.1-29.2(D). As discussed above, 29 U.S.C. § 213(a) includes the FLSA exemptions commonly referred to as the “white collar exemptions” for workers who meet the criteria for administrative, executive, or professional exemptions. The criteria for these exemptions are complicated, delving into the application of abstract rules to specific job duties, and employers frequently mistakenly classify workers as meeting these exemptions simply because they are paid a salary. The notion that salaried employees are not entitled to overtime pay, merely because they receive a salary, is incorrect. 

The exemption in 29 U.S.C. § 213(b)(1) applies to motor carriers regulated by the Secretary of Transportation. The exemption in (29 U.S.C. § 213(b)(11) covers drivers and driver’s helpers making local deliveries who are paid under plans approved by DOL.

Employers who misclassify workers as “exempt” can cost the workers a great deal of income in the form of unpaid overtime compensation. Workers who believe they may be misclassified as exempt under any of these exemptions should contact an employment attorney. 

Remedies for Employees, Private Cause of Action, and Hybrid Cases

Importantly, the VOWA incorporates the remedies provisions of the Virginia Wage Payment Act, VA Code § 40.1-29(J). The VOWA provides:

Any employer that violates the overtime wage requirements of this section shall be liable to the employee for all remedies, damages, or other relief available in an action brought under subsection J of § 40.1-29.

VA Code § 40.1-29.2(F). Thus, the VOWA authorizes employees to file suit in court against an employer who fails to pay overtime wages, and to recover the same categories of remedies, damages, and other relief available for violations of the VWPA.

Like the VWPA, the VOWA authorizes both individual and group lawsuits. If an employer fails to pay overtime wages in accordance with the VOWA, the employee may bring an action, individually, jointly with other employers, or on behalf of similarly situated employees as a collective action consistent with the collective action procedures of the Fair Labor Standards Act, 29 U.S.C. § 216(b), to recover payment of the wages. 

An employee who has experienced violations of both the FLSA and the VOWA may bring a hybrid collective action and class action in federal court. So long as the requirements of Rule 23 of the Federal Rules of Civil Procedure are met, in addition to the collective FLSA claims, an employee may be able to assert a class action in federal court covering the state law VOWA claims. Class actions have some advantages over collective actions, such as tolling of the limitations period for putative class members during the pendency of the action. See, e.g., Am. Pipe & Const. Co. v. Utah, 414 U.S. 538, 554 (1974).

If the employee or employees prevails on the VOWA claims, the court must award:

  • The wages owed;
  • An additional amount as liquidated damages; 
  • Prejudgment interest at an annual rate of eight percent from the date the wages were due; and 
  • Reasonable attorney fees and costs. 

Triple damages are also possible. If the court finds that the employer “knowingly” failed to pay wages to an employee in accordance with the VOWA, the court must award the employee an amount equal to triple the amount of wages due and reasonable attorney fees and costs. VA Code § 40.1-29(J)&(G); VA Code § 40.1-29.2(F).

“Knowingly” Defined

For purposes of the triple damages provision, the VWPA and the VOWA provide that a person acts “knowingly” with respect to information if the person: 

(i) Has actual knowledge of the information;

(ii) Acts in deliberate ignorance of the truth or falsity of the information, or 

(iii) Acts in reckless disregard of the truth or falsity of the information. 

Notably, establishing that a person acted “knowingly” does not require proof of specific intent to defraud. VA Code §§ 40.1-29(J) & (K); VA Code § 40.1-29.2(F).

Statute of Limitations

The VOWA provides that an action for overtime violations must be commenced within three years after the cause of action accrued. VA Code § 40.1-29.2(G)

This article was also published on TimCoffieldAttorney.net.

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