Employment law to see major changes July 1

Virginia employment lawyers are bracing for sweeping changes to their practice beginning July 1 as a wave of worker protection legislation takes effect.

Lawyers for employees sound gleeful as they describe extensive changes that benefit workers in disputes with management. Management lawyers are counseling clients on ways to avoid liability.

Both sides describe a new landscape for job claims – much of it in the unfamiliar territory of state court.

“It’s just a huge sea change for Virginia. A huge sea change,” said Elaine Charlson Bredehoft of Reston, who represents employees in disputes with management. “For so long, it’s just been an uphill battle and brick walls,” she said.

Virginia Values Act

A bill touted as expanding protections for LGBTQ employees may have a much more far-reaching impact, lawyers say.

Virginia may be just catching up to other states on many employee protection issues, but lawyers for workers say the so-called “Virginia Values Act” may represent a step ahead of most states.

Previously, the Virginia Human Rights Act was structured to fill a gap left by federal civil rights laws. It applied to companies with six to 14 employees. The law allowed limited causes of action for unlawful discharge based on discrimination.

Senate Bill 868 creates a private right of action for a broad spectrum of discriminatory acts by businesses with more than 15 employees. Businesses with as few as six workers can be sued for wrongful discharge. The bill also prohibits discrimination in public accommodations.

The law creates a new Division of Human Rights in the attorney general’s office to investigate complaints.

“It’s a welcome addition to Virginia law,” said Harris D. Butler III of Richmond, a lawyer for employees.

The language of the legislation, which takes effect July 1, creates uncertainty about certain filing deadlines, lawyers said.

“There may be litigation as to how the statute operates procedurally,” said Betty S.W. Graumlich of Richmond, a labor and employment attorney who works with management.

Butler explained it’s not clear under the new law whether plaintiffs have a 180-day or 300-day filing deadline until the new human rights division is created. He’s telling employee counsel to use the 180-day limit to be on the safe side.

“Until that gets in place, that’s kind of a landmine,” Butler said.

Whistleblower law

The “sea change” label may not apply to all of Virginia’s new employment laws, Butler said.

In one respect, legislation is returning Virginia to the common law in public policy wrongful discharge claims.

Butler pointed to the 1999 Virginia Supreme Court opinion in Dray v. New Market Poultry Products Inc. where the court declined to recognize common law whistleblower retaliatory discharge claims, limiting remedies under Virginia’s Bowman line of cases.

House Bill 798 provides broad protections to employees who report violations of any federal or state law or regulation. The new law will create a private cause of action in Virginia courts in which broad equitable relief is available.

A plaintiff could not collect for emotional distress or punitive damages, but the law allows remedies of reinstatement, injunction, back pay and attorneys’ fees and costs.

The legislation supplants the Dray decision, Butler said.

“Bowman is still alive, well and returned to its pre-1985 abrogated status,” Butler said.

Wage protection

Employees are getting enhanced wage protections from other measures approved by the 2020 Assembly.

House Bill 123 allows workers to sue for unpaid wages. Courts can award up to three times the amount of unpaid wages, interest and attorneys’ fees and costs.

House Bill 336 expands the ability of the Virginia Commissioner of Labor and Industry to investigate companies that don’t pay their employees.

House Bill 337 prohibits employers from retaliating about employees who file a complaint for unpaid wages. Employees can win back twice the amount of unpaid wages and reinstatement.

Misclassification

Other legislation addresses the problem of worker misclassification. Employers can be tempted to label an employee as an independent contractor to save on benefits, insurance, employment taxes and other costs. House Bill 984 allows the misclassified employee to sue the employer to recover lost wages and benefits, expresses that should have been covered by insurance, other lost compensation and attorneys’ fees and costs. The new law will create a presumption that anyone who performs services for remuneration is an employee, shifting the burden to the employer to show that the worker is an independent contractor under IRS guidelines.

If the employer misclassified employees and failed to pay employment taxes, House Bill 1407 allows the tax commissioner to impose a civil penalty, bar government contracts for the company and report the violation to other Virginia agencies.

House Bill 1199 bars retaliation against employees and independent contractors who report misclassification or who are asked to participate in an investigation of misclassification.

Noncompetes

House Bill 330 was billed as a ban on covenants not to compete for “low wage employees,” but it will protect a surprisingly large group of workers. Lawyers who have worked the formula in the bill say it covers workers making almost $60,000.

“So it’s not what we might think of as a minimum-wage worker,” Butler said.

The law could affect noncompete provisions in employment agreements, standalone restrictive covenants and separation agreements, according to advice from the Ogletree Dawkins firm.

Less clear is how much the noncompete law will restrict customer nonsolicitation provisions.

The bill creates a private right of action with a two-year statute of limitations.

State court venue

Perhaps the most significant part of these new laws is that they open the doors of Virginia courthouses to employment claims, lawyers said.

Workers with job claims have traditionally had to file in federal court, where employers can count on close court scrutiny of those claims through summary judgment motions. Jury trials and settlements are much more likely in state court, Graumlich said.

Lawyers we contacted had different advice for employers facing the new world of exposure to claims in state court. Sen. Scott Surovell, D-Mount Vernon, said he was telling businesses to get severance agreements with every terminated employee. Graumlich said she was urging mediation and arbitration agreements as part of the hiring process.

As for employee counsel, they’re looking forward to a new age.

“I’m smiling from ear to ear,” Butler said.