Virginia Wage Overtime Act: Ambiguities Astound Employers

As Virginia employers prepare for the new Virginia Overtime Wage Act (VOWA), ambiguities found in the act demand attention from employers, both private and public. We previously summarized the basics of the act here, but as with most new laws, the practical effects of the VOWA are now being felt by employers as they form their compliance plans in anticipation of July 1, 2021.

Much of the hand-wringing by employers appears tied to the interpretation of the phrase “pursuant to 29 U.S.C. § 207,” found in subsection B of the Act, republished here for context:

For any hours worked by an employee in excess of 40 hours in any one workweek, an employer shall pay such employee an overtime premium at a rate not less than one and one-half times the employee’s regular rate, pursuant to 29 U.S.C. § 207.

Some employers have interpreted this phrase to suggest that the variety of exceptions found under this Section 207 of the Fair Labor Standards Act (see 29 U.S.C. §§ 200 et seq.) remain intact and available for employers. Such an argument is important for employers whose budgets depend on the various exemptions found in Section 207 that cross many, varied industries (e.g., retail, service, tobacco, local bus carriers, etc.). A review of the oral remarks made during the legislative hearings surrounding the passage of the VOWA suggests that the General Assembly may have intended only to create a mechanism for employees to enforce their overtime wage rights in state court, modeled after federal law. Yet, the language of the VOWA suggests that Virginia’s legislators did much more than simply open up another venue for employees to bring their claims.

Concern Unique to Public Employers

In particular, local governments, including school boards and other public agencies, have grown concerned about one of the tools currently available to meet their overtime obligations. Many utilize subsection “o” of Section 207 to offer compensatory time (commonly known as “comp time”) in lieu of overtime wages under the FLSA, see 29 U.S.C. § 207(o).

However, the new statute goes on to preserve only Section 207(k) under the FLSA in its subsections C and E, with specificity. Under Virginia’s rules of statutory construction, this could mean that a court might determine that the General Assembly deliberately omitted every other subsection of 207(k) from the VOWA, including the ability for local governments to pay comp time. Troubling to public employers is the fact that the Virginia Department of Labor and Industry (VDOLI) seems to agree.

In guidance just issued in the last couple of weeks, the Virginia agency—which is tasked with investigating and, more importantly, enforcing wage and hour issues throughout the Commonwealth—issued an FAQ specifically addressing comp time, and stating:

Employers cannot provide comp time instead of pay. The overtime statute states “wages” are defined the same as in § 40.1-28.9. Overtime wages must be paid in legal tender of the United States or checks or drafts on banks negotiable into cash on demand or upon acceptance at full value.

Note: Under certain circumstances, fire protection and law enforcement employees may be compensated with leave for overtime hours instead of wages pursuant to Va. Code § 9.1-701.

Currently, unique to fire protection and law enforcement employees in Virginia is the ability to be paid an overtime premium for hours in the “gap” between the hours for which the worker receives their regular salary or hourly wage and the maximum threshold of hours before overtime is due under Section 207(k) of the FLSA. See Va. Code § 9.1-701 (commonly known as the “Gap Pay” statute). The Gap Pay statute expressly allows such workers to be paid for gap time in the form of comp time pursuant to Section 207(o) of the FLSA. However, the Gap Pay statute does not establish an overtime premium obligation—whether paid as wages or comp time—for law enforcement departments with fewer than 100 officers.

Many localities are scratching their heads, however, about how the VOWA will affect the Gap Pay statute after July 1, 2021. The VOWA directs employers of these safety positions to pay an “overtime premium” for all hours in excess of the Section 207(k) threshold, as well as “any additional hours such employee worked or received as paid leave as set forth in subsection A of § 9.1-701.” There is some debate among legal commentators as to how these two statutes will be interpreted by the courts with respect to the ability for localities to offer comp time, whether for gap time hours and/or for hours over the Section 207(k) threshold limits that trigger overtime.

Perhaps a legislative “fix” or opinion from the Office of the Attorney General will offer clarification on this issue in the near future. Until then, local governments should evaluate their comp time arrangements with non-exempt employees and consider whether they need to budget for replacing existing comp time agreements with overtime wages beginning July 1, under the advice of their legal counsel.

Lingering Concerns for Private Employers

To the extent the VADOLI has found the “pursuant to 207” argument unavailing for local governments who currently offer comp time, this may offer a clue to private employers who wish to maintain exemptions for workers based on other ambiguities found in VOWA.

For instance, there is some debate over whether the “Computer Personnel” exemption under the FLSA has been eliminated by the new Virginia law. This is because the VOWA begins first by defining “employee” as not including those exempt under 29 U.S.C. § 213(a). The computer personnel exemption is found as a subsection to Section 213(a), specifically in Section 213(a)(17). However, the statute goes on to expressly state that employers may assert an overtime exemption under Section 213(a)(1), which refers to the “white collar” exemptions of “executive, administrative, or professional” workers, as well as outside salespeople. Here, the General Assembly has omitted reference to the computer personnel exemption of 213(a)(17) and numerous other types of employees considered exempt from minimum wage and overtime under the FLSA (e.g., amusement, recreational, agricultural, switchboard, journalists, baseball workers, etc.). The question remains: Is Section 213(a)(1) the only exemption allowed under the VOWA? Again, it is possible that a court might find this omission to be deliberate and to the exclusion of all other 213(a) exemptions, which would confirm that computer personnel will soon be entitled to overtime wages.

Following the apparent inclination of VADOLI to interpret the VOWA in a manner that is more employee-friendly for local governments, private employers should carefully weigh the risks of maintaining any exemption—other than the white collar exemptions—currently afforded to them under Section 213(a) or (b) after July 1, with the benefit of legal counsel.

The Sands Anderson Employment Team will continue to monitor any legislative or court interpretations of the Virginia Overtime Wage Act. We stand ready to help public and private employers audit and evaluate their plans for compliance with this new law.