The Lipp Law Firm, PC

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The Lipp Law Firm, PC

In the first part of 2020, Virginia enacted a slate of revolutionary new employment laws, most of which benefit workers over management. Many high-profile changes were widely reported, such as the provision of the new Virginia Values Act that extends protection against discrimination to LGBT + individuals and veterans – yet other major updates went largely unnoticed despite the major impact they will likely have on Virginia businesses.

Crack-Down on Non-competes

Virginia now limits an employers’ ability to bind its low wage employees and independent contractors to non-competes.  A non-compete restricts an employee from working for a competitor’s company after quitting or being terminated from their job.

What is restricted under the new Virginia non-compete law?

The new law prohibits employers from entering into, enforcing, or threatening to enforce a non-compete for a “low wage employee” – i.e. an employee who makes less than the average weekly wage of the Commonwealth, which is presently just over $1,000.  The law also applies to independent contractors making less than the median hourly wage in the commonwealth, presently just under $20 per hour.

When is the new Virginia non-compete law effective?

The law will apply to covenants signed after July 1, 2020 and will not extend to non-disclosure or non-solicitation agreements.

Can a worker sue an employer under the new Virginia law and what could they recover?

Yes. The new law creates a private right of action for workers whose employers enforce or threaten to enforce a covered non-compete and allows successful plaintiffs to recover their legal costs and fees, as well as liquidated damages.  It further provides for a $10,000 civil penalty for employers who violate the law, meaning that even asking a covered worker to sign a non-compete will carry legal exposure.

What can Virginia employers with non-competes do to protect themselves?

Employers whose standard contracts include a non-compete, non-servicing, or non-solicit agreement should plan to contact The Lipp Law Firm to audit these clauses to comply with the new Virginia law.

State Discrimination Suits

Virginia also greatly expanded employees’ ability to sue for discrimination in state court.  State suits were formerly available only against those employers too small for federal anti-discrimination laws to apply.  The new Virginia Values Act (VVA), however, will make discrimination actions available against Virginia employers with 15 or more employees, and will extend to employers with 6 or more employees with respect to claims for wrongful discharge.

What does an employee need to do to file a discrimination claim under the Virginia Values Act?

To initiate a suit under the VVA, employees must first file a claim with the Division of Human Rights of the Virginia Department of Law.  The Division will investigate the claim, determine whether there is reasonable cause to believe that discrimination has occurred, and issue a determination, which will then trigger the employee’s right to sue the employer in state court.

What types of damages can an employee receive under the Virginia Values Act?

The VVA removes caps on compensatory damages when an employee prevails, and makes punitive damages, reasonable attorneys’ fees, and injunctive relief available.  Due to the enhanced potential for damages, and because Virginia does not provide for summary judgment in most civil actions (a mechanic that can favor employers and short-circuit trial on a discrimination claim), the VVA is likely to make discrimination actions much more expensive for employers to defend against.

What should Virginia employers do to protect against VVA discrimination claims?

Virginia employers should review their anti-discrimination policies with legal counsel to ensure that they include the new protected classes created under the VVA (including LGBT+ individuals and veterans) and become familiar with the pre-trial claims process, which will include options for mediation and conciliation, to ensure that claims are resolved as quickly as possible should they arise.

New Cause of Action for Employee Misclassification

Another new Virginia law creates a presumption that every worker in Virginia is an employee and places a burden on employers to show that a given worker truly qualifies as an independent contractor under applicable Internal Revenue Service (IRS) guidelines.

What types of damages can an employee receive under the new employee misclassification law?

The statute creates a private right of action for misclassified employees, making it possible for them to recover damages for lost wages, the value of benefits not received, and reasonable attorneys’ fees.

This new law is significant because it creates for the first time a right to sue based on misclassification only, meaning that an employee need not show that they are owed back overtime or the value of any lost benefits.  Moreover, because the law creates a presumption that all workers are employees, the burden is on the employer to show that a plaintiff worker was properly classified as an independent contractor.  Thus, a disgruntled worker formerly classified as an independent contractor can file suit against a previous employer much more easily with the expectation of very real damages if the worker prevails.

What should Virginia employers do to protect against employee misclassification claims?

Employers should plan to make a careful review of their workers’ present classifications with legal counsel to ensure that they are appropriately designated as either a W-2 employee or 1099 independent contractor, and ensure that the process by which workers are classified moving forward comport with the standards set by the IRS.

Compliance with New Virginia Employment Laws

In order to ensure that key employment documents are kept up to date and comply with changes in local, state, and federal law, it is a good idea to check in with legal counsel every 6-12 months to see whether any major changes have come down or any contracts or policies should be adjusted.  Some years may pass without material alterations in the law, but other years, like 2020, can bring surprising new statutes that carry serious penalties for failure to comply.

Contact The Lipp Law Firm at (703) 896-7704 or at katie@lipplawfirm.com to schedule a consultation.

Kathryn Megan Lipp, Esq.

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