April 14, 2022

Virginia Realigns Overtime Requirement with Federal FLSA

Sarah Martin, Michael McIntosh, Joshua Waxman

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Virginia, historically reliant on the federal Fair Labor Standards Act (FLSA) to govern overtime obligations, passed its first stand-alone overtime law in March 2021. The Virginia Overtime Wage Act (VOWA),¹ went into effect on July 1, 2021, amidst wide-spread confusion among Commonwealth employers over the law’s requirements. While Virginia’s Department of Labor and Industry (DOLI) rolled out informal guidance to clarify employer obligations under the new law, that guidance did little to assuage employer concerns over the VOWA’s many ambiguities. A year later, Virginia employers are being given a reprieve from the many compliance concerns and increased exposure to liability created by the 2021 law.

On April 11, 2022, Governor Glenn Youngkin signed into law HB 1173 (SB 631), sent to him by a Democrat-controlled Senate and Republican-led House of Delegates, rolling back the provisions of the VOWA and realigning Virginia’s overtime obligations and exemptions with those of the federal FLSA. These revisions will go into effect on July 1, 2022.

Virginia’s Return to Federal Overtime Standards

The 2022 amendments remove the 2021 VOWA provisions and clarify that employers must comply with FLSA overtime obligations. The amendments further emphasize that this realignment means employers may once again rely on the over 80 years of FLSA regulations, guidance, rules, and governing case law in determining their overtime obligations to employees.

Where Does Virginia Overtime Law Diverge from the FLSA?

Although Virginia’s recent overtime amendments largely align its overtime obligations with the federal FLSA, employers should be aware of certain differences.

First, the new amendments preserve employees’ private right of action under the state’s 2020 amendments to the Wage Payment Act, Va. Code § 40.1-29, which granted employees access to state courts to bring their individual or collective-action claims for unpaid wages, including overtime. This avenue is in addition to employees’ private right of action under the FLSA.
Similarly, damages for overtime violations in Virginia are not necessarily limited to those available under the FLSA. The heightened damages and penalties authorized under the Wage Payment Act remain viable for overtime violations in the Commonwealth. This includes automatic liquidated damages equal to the amount of unpaid wages and pre-judgment interest at 8% per year.² as well as the possibility of civil penalties of $1,000 for each violation and treble damages for “knowing” violations.³
Unpaid overtime claims pursued under the Virginia Wage Payment Act can be commenced within three years (see Va. Code § 40.1-29(L)), as opposed to the normal two years under the FLSA (except in the case of a “willful” violation, where the FLSA similarly provides a three-year limitations period).⁴
Finally, the VOWA amendments disallow the exemption for derivative carriers, available under the FLSA, in the Commonwealth. A “derivative carrier” is a subsidiary or affiliate of an air carrier, within the meaning of Title II of the Railway Labor Act, that enjoys common ownership or control with the parent and whose employees perform work traditionally performed by airline employees.

A summary of the major changes to the Commonwealth’s overtime requirements following the rollback of the VOWA are provided below.

	VOWA July 1, 2021 through June 30, 2022	Post-VOWA as of July 1, 2022
Code Section	Va. Code §§ 40.1-29 – 40.1-29.2	Va. Code §§ 40.1-29 – 40.1-29.3
Regular Rate for Determining Overtime Pay	The “regular rate” used to determine overtime pay is calculated differently for hourly employees and for those employees paid on a “salary or other regular basis.” For hourly employees, the regular rate is calculated the same as under the FLSA, with all remuneration (less any amounts that are excludable under the FLSA) being divided by the total number of hours worked in that workweek. For non-exempt employees paid on a “salary or other regular basis,” however, the regular rate is determined by dividing all wages in the workweek by forty (40).	The regular rate calculation for all non-exempt employees is the same as under the FLSA, with all remuneration (less any amounts that are excludable under the FLSA) being divided by the total number of hours worked in that workweek.
Salaries for Non-Exempt Employees as Payment for All Hours Worked	Salaries or pay on an “other regular basis” to non-exempt employees must be treated as pay for 40 hours worked within a workweek. Any time worked above 40 hours within a workweek must be paid at an additional one-and-one-half times the employee’s regular rate. As a result, the “fluctuating workweek” method of computing overtime (see 29 C.F.R. § 778.114) is unavailable.	As under the FLSA, employers may treat salaries paid to non-exempt employees as straight-time pay for all hours worked within the workweek. Where (i.) an employee’s work hours fluctuate from week to week, (ii.) the employee receives a fixed salary that does not vary with the number of hours worked; and (iii.) the employee and employer have a clear mutual understanding that the fixed salary is compensation for all hours worked in the workweek, the employer may lawfully pay a premium equal to only one-half the regular rate for all time worked above 40 hours in workweek (i.e., may use the “fluctuating workweek” method of calculating overtime, see 29 C.F.R. § 778.114).
Exemptions from the Overtime Obligation	Only certain overtime exemptions available under the FLSA are available under Virginia state law. Specifically, this includes the exemptions set forth under 29 U.S.C. § 213(a), 29 U.S.C. § 213(b)(1) and (b)(11), and after August 10, 2021, 29 U.S.C. § 213(b)(10)(A).	All exemptions available under the FLSA (29 U.S.C. § 207, § 213(a) and (b)), except the exemption under 29 U.S.C. § 213(b)(3) as applied to derivative carriers, are available in Virginia. In addition, relevant interpretations and guidance issued under the FLSA apply.

What Else Do Employers Need to Know?

Virginia Secretary of Labor Bryan Slater will convene a statutorily required work group to review overtime issues that may arise under the VOWA amendments. The group will provide a report, including findings and recommendations, for the governor and relevant Virginia General Assembly stakeholders by November 1, 2022.

Footnotes

¹ Va. Code § 40.1-29.2.

² See id. at § 40.1-29(G) & (J).

³ See id. at § 40.1-29(H) & (J).

⁴See 29 U.S.C. § 255.

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