On the books: New employment laws take effect July 1

July marks the unofficial halfway point of summer for many — family vacations, outdoor cookouts and many of the appeals of the season.

In Virginia, July 1 also marks an important date on the calendar — the day laws passed by the General Assembly earlier in the year and signed by Gov. Glenn Youngkin become effective.

This year’s batch of new laws include a selection of employment matters with impacts on both the employment law bar as a whole and more specialized areas of practice.

“At first blush, the new employment laws set to go into effect in Virginia on July 1 might seem minor, and they certainly pale in comparison to the seismic employment law changes that were enacted in 2020 anchored by the Virginia Values Act,” Berenzweig Leonard managing partner Declan Leonard told Virginia Lawyers Weekly. “But a few could have a substantial impact on workplaces and the way employment lawyers advise companies.”

HB1895

Among the most noteworthy pieces of employment law legislation from this year’s legislative session is House Bill 1895. The bill expands the scope of an existing law that prohibits employers from requiring prospective or current employees to agree to a confidentiality or nondisclosure agreement that would restrict disclosure of sexual assault.

Beginning July 1, the law will also prohibit non-disparagement terms and cover claims of both sexual harassment and sexual assault.

Brian Muse, a shareholder at Sands Anderson’s Williamsburg and Richmond offices, noted that the bill is “modeled on” the Speak Out Act, a federal law signed by President Joe Biden in 2022 that prohibits the enforcement of nondisclosure and non-disparagement clauses relating to sexual assault or sexual harassment matters.

“I’m not saying this is identical to it, but in a lot of ways it is mirrored, and I think explicitly designed to capture those restrictions under Virginia law,” Muse said.

He added that, for employment law attorneys, the new law may alter how employers approach sexual harassment claims stemming from an existing employee.

“We may see some significant changes in how employers approach those types of claims, particularly if there is a prospect of having a settlement related to a sexual harassment claim with an existing employee and you don’t have the ability to keep the terms of that confidential,” Muse said, pointing out that the new law could result in “more litigation of those claims” rather than settlements.

Leonard also noted the potential for employers to be less likely to seek settlements after the law is enacted.

“In practice it could have the unintended consequence that employers will not be as open to settling these claims through monetary payments if the resulting settlement agreement will not serve to keep those claims confidential,” Leonard said.

The expansion of the law to include “any provision” regarding non-disparagement is a “significant aspect” of the new legislation, according to Muse.

“It’s hard before we see it in operation to fully understand what that means, but I think it’s safe to say that it will expand beyond something that’s just a self-styled confidentiality agreement,” he said. “Any agreement that also sort of touches on those points would also be subject to these restrictions.”

Virginia Employment Commission

Passed unanimously by the General Assembly earlier this year, House Bill 2010 will grant commissioners of the Virginia Employment Commission the ability to “authorize any attorney employed by the Commission to issue subpoenas to compel the attendance of witnesses and the production” of records deemed necessary as evidence.

Muse told Virginia Lawyers Weekly the new law gives the commission “a lot more teeth in terms of its ability to get information and get documents rather than be at the mercy of what parties choose to provide.”

Leonard said it could impact how employers treat “tricky” unemployment claims.

“It is not uncommon for companies to simply not respond to the VEC request for information on an employee’s separation, if doing so might pose an issue with the terms of the separation agreement or if the employer simply does not want to rub salt in the wound of an already tough financial predicament of an employee losing their job,” Leonard said.

He noted that, beginning in July, unresponsive employers may face being subpoenaed and become required to participate in the unemployment process.

Beyond the subpoena power, Muse doesn’t see a major change in hearings before the VEC.

“It’s not a change in the standards or the procedures of VEC hearings or what qualifies an individual for unemployment,” Muse said. “But it’s going to be a tool in the VEC’s arsenal in order to get at this information.”

‘Niche areas’

Also going into effect July 1 are a smattering of bills dealing in specialized areas of employment law.

“A few could certainly be called niche areas of employment law, such as the prohibition against employers using employee Social Security numbers, organ donor leave and minimum wage for the disabled,” Leonard said.

House Bill 1924 will amend the Virginia Minimum Wage Act to limit use of the subminimum wage, eventually sunsetting the subminimum wage in 2030. The law limits the use of the subminimum wage to individuals with disabilities “pursuant to the federal Fair Labor Standards Act” that are receiving the subminimum wage before July 1, 2023.

Muse noted that Virginia “is one of a shrinking number of states” that still permits employers to pay subminimum wage.

“The impact of this law is probably going to be somewhat minimal, because we’ve seen the number of employers that are utilizing the subminimum wage significantly shrinking over time,” he said.

Senate Bill 1040, which passed the legislature unanimously, bars employers from using an employee’s Social Security number “or any derivative thereof” as an employee identification number or on an access card or badge.

Employers face a $100 civil penalty for any knowing violation of the prohibition.

“I would say it’s probably not a good practice generally to use Social Security numbers for these kinds of purposes,” Muse said. “It would restrict, as I read the bill, for example, the famous ‘we’ll just use your last four digits,’ because that would be a derivation of the Social Security numbers.”

Senate Bill 1086, meanwhile, requires employers with 50 or more employees to provide up to 60 days of unpaid leave for living organ donors, and 30 days of unpaid leave for living bone marrow donors.

The bill also prohibits employers from taking retaliatory action for employees taking organ donation leave, which Muse noted as “the bigger point” of the legislation.

“In theory, it could offer another source of a retaliation claim, along with likely an ADA or FMLA claim, if an employer doesn’t provide the appropriate leave or takes adverse action when an employee returns from the leave,” he said.