Virginia has enacted legislation (House Bill 2063 also known as the Overtime Wage Act) that expands overtime protections. House Bill 2063 is effective July 1, 2021.
Background:
The federal Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least the minimum wage per hour and 1.5 times their regular rate of pay (overtime pay) whenever they work more than 40 hours in a workweek.
Hourly employees:
To determine an employee's regular rate of pay for overtime purposes, the FLSA uses a standard formula: all payment for employment, with certain exclusions permitted by law, divided by all hours worked in the workweek.
Salaried non-exempt employees:
Employers may pay non-exempt employees on a salary basis as long as the employee is paid at least the minimum wage for all hours worked and overtime when due. Under the FLSA, calculating a salaried non-exempt employee's regular rate of pay for overtime purposes depends on the number of hours the employer and employee understand that the salary is intended to cover. For example, if the employer and employee understand the salary to cover 45 hours, then the employer may calculate the regular rate of pay by dividing the weekly salary by 45 hours.
House Bill 2063:
The Overtime Wage Act (the Act) adds additional protections for salaried non-exempt employees and stricter penalties for employer violations than what is currently covered under the FLSA.
Regular rate calculations:
For salaried non-exempt employees, the Act establishes a new formula for calculating the regular rate of pay: one-fortieth of all wages paid to an employee for that workweek. Ultimately, the new formula prevents employers from paying non-exempt employees a fixed salary that only covers straight-time wages for hours in excess of 40 hours in a workweek, or from using the FLSA's "fluctuating workweek" method for calculating overtime.
Statute of limitations & penalties:
The Act also increases the amount of time an employee can claim an overtime violation from two years, under the FLSA, to three years and increases damages. All overtime violations are subject to double damages, or treble damages in the case of willful violation. Additionally, the "good faith" defense that is available to employers under the FLSA is not permitted under the Act.
Compliance Recommendations:
Virginia employers should review their policies and procedures to ensure compliance with House Bill 2063 by July 1, 2021. Please contact your dedicated service professional with any questions.