All Employers with VA Employees
July 1, 2021
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Beginning July 1, 2021, HB 2063, the Virginia Overtime Wage Act (VOWA), will create new state overtime wage requirements for employers that differ from the federal Fair Labor Standards Act (FLSA). Although the same basic federal regular rate calculation is adopted into the new state rules for hourly employees, there is a different regular rate calculation for non-exempt salaried employees. Specifically, their regular rate will be calculated as “one-fortieth of all wages paid for that workweek.” This new definition will create additional exposure for employees who are misclassified as overtime exempt, given that the 1.5x overtime rate (rather than a 0.5x rate) will be in addition to the wages already paid. Additionally, the new regular rate is based on a 40-hour workweek, rather than the total hours actually worked as is used under the FLSA.
The following is an example of a nonexempt, salaried employee wage calculation under the new rules:
- $800 weekly salary / 40 hours = $20.00 per hour (regular rate)
- $20 (regular rate) x 1.5 = $30 per hour (overtime rate)
- 10 hrs. overtime x $30 per hour = $300
- $800 weekly salary + $300 overtime = $1,100 gross weekly wages
Further, the statute of limitations for violations of the VOWA is three years, one year longer than the two-year statute of limitations under FLSA. Also, the potential damages have been expanded. Overtime wage violations are subject to double damages, including prejudgment interest, without the availability of a “good faith” defense. For “knowing” violations, employees may be able to recover treble damages.
- Review HB 2063 here.
- Have overtime exempt classifications reviewed for compliance.
- Prepare to update payroll processes accordingly.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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