Virginia’s wave of employee-friendly legislation continues. In  2020, the General Assembly greatly expanded the scope of the  Commonwealth’s employment discrimination laws and began the process of  hiking its minimum wage toward a $15-per-hour target. This year,  lawmakers turned their attention to overtime protections by enacting the Virginia Overtime Wage Act, which takes effect July 1, 2021.

 New overtime calculation requirements

 The new wage law specifically requires employers to pay 1½ times an  employee’s regular pay rate for hours worked in excess of 40 in a  workweek. For nonexempt employees paid on an hourly basis, the regular  rate is not only her hourly pay rate but also other wages, such as  commissions or nondiscretionary bonuses paid or allocated during the  workweek.

 As written, the new law would seem to preclude employers from paying  nonexempt employees a fixed salary to cover wages for hours in excess of 40 in a work week on a fluctuating workweek (FWW) basis, a method  allowed under federal law. Instead, you must pay time and one-half for  each hour an exempt employee works over 40 without exception.

 New penalties for employers

 Not only does the new law favor employees in calculating the overtime  rate, it also incorporates special protections for workers seeking to  enforce their overtime rights. Importantly, the protections provide for  greater penalties on employers that fail to pay the proper amount of  overtime and strengthen the procedures employees may use to enforce  their rights.

 Thus, employers that commit overtime wage violations will now be  subject to liquidated (or double) damages without being able to rely on  the federal Fair Labor Standards Act (FLSA) “good faith” with  “reasonable grounds” defense.Moreover, the new Virginia law allows  employees to recover treble damages when an employer is found to have  committed a “knowing” violation of the law. Such a violation is one  where the employer had actual knowledge it wasn’t paying overtime wages  and acted in deliberate ignorance or reckless disregard of its overtime  obligations. The FLSA has no similar treble damage provision.

 New procedural changes

 On the procedural front, the Virginia Overtime Wage Act contains a  longer statute of limitations than the FLSA by establishing a three-year limitations period for overtime claims and allowing an employee to  recover overtime pay for up to three years. The FLSA, by contrast, has a two-years limitation period, which may be extended to three years only  for willful violations by the employer.

 Finally, although Virginia normally doesn’t allow class or collective  actions, the new law contains an explicit authorization for employees to sue their employer collectively for violating the statute. Therefore,  it's vitally important you understand and comply with the wage and hour  obligations.

 Bottom line

 With the new law's passage, the Commonwealth has made clear it won't  tolerate an employer’s failure to pay overtime to its employees.  Accordingly, you should review your overtime pay practices to ensure  they comply with not onlythe federal FLSA but also the new Virginia law.

 The last thing you want to contend with is a collective action by your  employees seeking three-years’ worth of overtime pay, with the amount  being trebled for “knowing” violations.

Jonathan R. Mook is a partner at DiMuroGinsberg P.C. in Alexandria, Virginia, and can be reached at jmook@dimuro.com. Mook is a nationally recognized authority on the Americans with Disabilities Act (ADA) and is the author of two treatises published by Matthew Bender Company and lectures nationally on the ADA and other employment law topics.